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In Washington, sometimes the facts get in the way of a good story when it comes to advocating for changes to public policy. Eventually, the facts have the pesky ability to expose the cold hard truth of a well-spun fairy tale. This is what happened when price controls were enacted on debit card transactions and consumers suffered as a result. An amendment authored by Senator Durbin was attached to Dodd-Frank and passed in the dead of night with little scrutiny or debate. The provision, which dictates price controls on debit card transactions, was hailed as a consumer benefit because advocates said that the money it generated would go directly back into the pockets of hardworking Americans. Continue Reading
Retailers are once again making the rounds on Capitol Hill this week asking for another handout from Congress. Despite their annual $8 billion windfall—a direct result of the last-minute Durbin Amendment to the Dodd-Frank Act—they are looking for even more money under the false pretense that consumers will benefit. It’s an empty promise, and we’ve heard it many times over. Continue Reading.
The electronic payments industry works tirelessly to ensure consumers’ private data and money are protected during each transaction. This includes improving current security measures and investing in innovative solutions on both sides of the payment equation. PIN is old news in the security world, with other advanced and effective solutions already on the market. The banking industry originated PIN in 1967 for use at ATMs and is well acquainted with its strengths and weaknesses, including the serious consequences it has when compromised. Continue Reading.
In his recent commentary, Lyle Beckwith continues to push the myopic perspective of PIN technology. Unfortunately, his singular focus on credit card security ignores the need to protect consumers’ retail transactions in-store and online. Last year on Cyber Monday alone, retailers racked up a record $3 billion-plus in online sales, according to Adobe Digital Index. Beckwith fails to consider the huge retail data breaches that occurred through malware and which would not have been prevented by the use of PINs. We have long stated EMV transition is an important step in the process of data security, but it is not a silver bullet. In other countries, the transition has taken two to five years. Curiously, there has been a move away from PINs in both Canada and Europe. In fact, in Europe 20 percent of transaction volume is now EMV contactless, which doesn’t require PIN or signature authentication. Continue Reading.
Retailers who claim that restrictions on debit card fees benefit credit unions and community banks miss the point: these price controls are bad for consumers. After Congress passed the Durbin amendment — which was authored by Sen. Dick Durbin as part of the 2010 Dodd-Frank Act — merchants promised to pass the savings on to consumers in the form of lower prices. Continue Reading.
At first blush, you might well wonder why anyone would be against loyalty programs. Whether you earn points by shopping at a particular store or by using a particular credit card, you are rewarded for your loyalty. Maybe you exchange your points for a discount on airfare for a sun-filled vacation. It’s all voluntary, and everyone involved seems to benefit.
Inside the Beltway, a battle has been raging for close to a decade pitting retailers against America’s credit card companies, better known as Visa V -0.38%, MasterCard MA +0.00% and American Express AXP +1.43%. The fight has occurred on different fronts ranging from cyber-security to interchange fees, the fees retailers pay to allow customers to use credit cards. In 2010, with the enactment of the Dodd-Frank bill, which contained a retailer desired cap on debit card fees, many believed the retailers would declare victory and go home but it appears they are back seeking another bite at the crony capitalist apple.
Last week The Hill ran a piece by Merchant Payments Coalition Chairman and National Retail Federation SVP Mallory Duncan, in which he asked Congress to adopt a European model of price fixing and give big box retailers a multibillion handout at the expense of American consumers. For those who have been following the payments industry for the past decade, his demand for government price fixing of credit interchange rates – the fee that merchants pay to accept credit cards — will come as no surprise. What makes this demand so remarkable is the fact that it blatantly ignores the failures of these policies in the U.S. and around the world.
They say that imitation is the sincerest form of flattery—and a corollary to that adage is the idea that if you want to be successful, you look at someone who has achieved success and build on how they got there. The opposite, of course, is to imitate folks who are less successful and think, somehow, that this is a recipe for success. Yet that seems to be what some folks continually call for when they want the U.S. to be “more like Europe” economically—Europe, whose socialist and quasi-socialist policies have led to complete economic stagnation. Although the American economy has experienced slow growth in recent years, the numbers show that our growth far exceeds the growth experienced in Europe. One reason is that American consumption rates are at far higher levels than in your average European nation.
Over the past few months all payments stakeholders have taken a major step forward in payments security. Millions of Americans have received chip cards and thousands of retailers have taken steps to turn on chip readers, making those cards virtually impossible to counterfeit. Instead of a applauding this step forward, a small number of retailer trade associations have instead focused their efforts on mandating the use of PINs to authenticate transactions. This single-minded campaign has generated bemusement among security experts who recognize that PINs would not stop merchant breaches, like those at Target, Home Depot or Michael’s and that PIN fraud has increased threefold between 2004 and 2012. And now, it is increasingly clear that this campaign doesn’t even align with the positions and experiences of many of the retailers who belong to these trade associations.