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“Rent-seeking” is a widely recognized economics term that refers to when people or groups try to obtain economic benefits for themselves through a subsidy in the political arena. In Washington, the term has special significance. Special-interest groups regularly try to gain subsidies by securing a special regulation that disadvantages competitors. In 2010, the powerful retail lobby went “rent-seeking” and found its champion in Sen. Dick Durbin, D. Ill. His debit interchange fee provision inserted in the Dodd-Frank Act has resulted in the successful transfer of more than $35 billion from one sector of the economy to another. The Durbin amendment, as it has come to be called, mandated that the Federal Reserve cap the “swipe fees” that banks charge retailers for the service of processing electronic payments. Continue Reading
Last month news broke that allergy sufferers were paying nearly 570 percent more for EpiPens than they were when the technology was introduced in 2007. Members of Congress, their constituents, and the media were outraged, and demanded an investigation. Rightly so. Consumers deserve answers. Just as outrageous is how big box retailers have spent the $36 billion in additional profits they’ve pocketed since debit card price controls were put into place six years ago at the behest of merchant lobbying groups. Members of Congress and their constituents deserve answers. Continue Reading
As the campaign season is now in full swing, many voters are tuning into politicians that are saying and do anything to get elected. However, there are some leaders that truly take on the hard work of legislating and work tirelessly to try and solve the problems of hardworking Americans. That is why the Electronics Payments Coalition is commending House Financial Services Chairman Jeb Hensarling for putting serious thought and initiative into creating The Financial CHOICE Act. The bill’s name stands for Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs, and would help boost the economy by creating more competition while providing much needed relief from overly burdensome regulations. Of critical importance to our coalition is repealing the harmful federal price controls of the Durbin Amendment that mandated debit card acceptance fees. Continue Reading
For more than four years price-fixed interchange fees have enabled retailers to enjoy an extra $36 billion in revenue under the Durbin Amendment—at the expense of customers. Despite assurances that this income would be passed on to debit customers in the form of lower prices, retailers have taken advantage of this defective policy to pad their bottom lines leaving customers with broken promises and empty wallets. Thankfully, House Financial Services Chairman Jeb Hensarling and Congressman Randy Neugebauer are addressing the Durbin Amendment which is allowing retailers to exploit the electronic payments system. Since 2011, the legislation has only harmed customers and placed undue stress on financial institutions and their ability to offer low-cost products. Continue Reading
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.