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Christmas is the time for goodies and gifts but lobbyists for the retail industry’s are hoping Congress grants their wish list of crony capitalist giveaways that will cost consumers while increasing their own profit margin. Andrew Langer, the President of the Institute for Liberty, is pulling the alarm on the crony scheme pushed for by lobbyists for the retail industry to impose federal price controls on credit card fees: “Congress should reject European price controls,” that “while America’s regulatory costs have ballooned since 2005, Europe’s have positively skyrocketed. Thankfully, the United States has not copied the statist policies in many European counties that hamper economic growth. But right now, well-funded lobbyists are pushing a European idea that the government should set price controls on payment processing fees. These same lobbyists were successful five years ago in implementing a cap on card swipe fees, yet that was not enough for them. They … Continue reading
Most in politics can understand it when those firmly on the progressive side make the argument that we in America need to enact public policy more like that of Europe. But when one American industry is locked in a battle with another, and seeks to use the force of the federal government to intervene in that fight, Members of Congress should know not to buy that bill of goods when one industry wants the federal government inflicted on another just to increase their bottom line at the expense of the other. Such is the case with the latest push by the retail lobby to enact European type price controls on the interchange fees charges to retailers for accepting debit and credit cards from their customers.
Voters are twice as likely to say that retailers, not financial institutions, are responsible for protecting customers’ data.
Will ATM machines soon be able to identify you by your eyes? Citigroup Inc. is testing new technology with automated-teller-machine maker DieboldInc. that would allow customers to withdraw money with an eyeball scan or a code on a smartphone instead of a card swipe. The new technology, set to be announced by Diebold on Monday, is the latest foray by big banks to find easier, more secure ways for consumers to access their cash than the ATM card, a staple in consumers’ wallets for decades.
Retailers who thought the roar surrounding EMV would reach a lull after Oct. 1 are in for a bit of a rude awakening. After all, there’s still work to be done. In the second day of hearings for the U.S. House Small Business Committee on Oct. 21, experts from the Electronic Payments Coalition traded opinions with legislators on how best to approach the issue of payment security. In a statement to the committee, Sam Fabens, spokesperson for the EPC, claimed that large retailers aren’t doing all they could be doing to help their smaller counterparts.
The Electronic Payments Coalition has publicly commended the FBI’s recent public service announcement (PSA) about the EMV policy shift underway in the US. The shift is essentially putting EMV chip cards into the hands of American consumers as the country’s regulatory framework shifts to incentivize their use, since the EMV chip cards’ automatically generated one-time codes for transaction authentication add an important extra layer of security to transactions. While EMV chip cards are undeniably more secure than traditional magnetic strip cards, the FBI’s PSA focused on the security risks that are nevertheless present in the new technology. That’s fine with the Electronic Payments Coalition, which has issued a statement in which it uses the FBI’s PSA as an opportunity to highlight the advantages of EMV chip security while warning against consumer complacence when it comes to security. The EPC notes that in other countries where EMV chip cards have been … Continue reading
The FBI went back and forth Thursday, Friday and Saturday on a public service announcement about the security of new chip cards under the so-called EMV migration — issuing, then revoking and finally revising a PSA that originally made retailers happy but prompted complaints from the financial services industry. The bureau’s initial version included lines such as “When using the EMV card at a PoS terminal, consumers should use the PIN, instead of a signature, to verify the transaction” — erroneous advice, since consumers in the U.S. generally don’t have the option of using PINs for credit card transactions. Brian Dodge, executive vice president of the Retail Industry Leaders Association, said the original language “should be a wake-up call to the banks and card networks that continue to stand in the way of making PIN authentication the standard in the U.S.” By Saturday, after the FBI had deleted the line … Continue reading
The Great Recession devastated the American economy and disrupted the lives of millions of Americans who were laid off or lost their homes to foreclosure. In an effort to promote economic recovery and ward off another financial crisis, Congress passed legislation to reform the financial system and establish safeguards for American consumers. By many measures, the economy is now recovering, but a recent paper based on the congressional testimony of a law professor at George Mason University argues that the financial reform legislation is actually hampering economic growth. Todd Zywicki maintains in his recent paper summarizing testimony given to the U.S. House of Representatives Financial Services Committee that, five years after its enactment, the recession-responsive legislation is failing to achieve its goal of protecting consumers and investors. He contends that several pieces of financial reform legislation are increasing inflation, reducing consumer choice, and limiting millions of Americans’ access to credit. … Continue reading
When U.S. Sen. Dick Durbin persuaded Congress to cap the fees retailers pay for debit card processing, he promised the retailers would pass the savings on to consumers. Studies have shown they haven’t, and four years later, bankers and others say the Durbin amendment, passed as part of the Dodd-Frank financial reform law, is an abject failure.
It is sometimes said that the definition of a true compromise is one in which neither party is really happy about the end result. If you accept that definition, perhaps the Durbin Amendment represents the ultimate compromise. The Durbin Amendment, a last-minute provision of Dodd-Frank Act, put a cap on the fees banks over $10 billion in assets could collect on debit card transactions – or rather, it directed the Federal Reserve to regulate that matter. But the cap on interchange fees was supposed to make up for it, at least to consumers, by enabling merchants to lower their prices because they would save a bundle on swipe fees. Not so much. According to a recent study out of the Federal Reserve Bank of Richmond, the Durbin Amendment resulted in neither cost savings to consumers, nor (interestingly enough) savings to merchants. “We were saying this back when this was first … Continue reading