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Navigating a New Economic Landscape |
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Competition and what some see as the commoditization of the acquiring business have contributed to a new economic reality. “The economics of this business have changed. And they’ve changed forever,” says Mark P.J. Sievewright, corporate senior vice president, market development, at Brookfield, Wisconsin-based Fiserv (www.fiserv.com).
Increasing competition has put an end to generating revenues off fees, and card companies are making less money on net interest and interchange income. “Today, apart from ‘privilege cards,’ the general purpose credit card market is largely fee free for most consumers,” says Sievewright.
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Building A Compliance Safety Net |
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When it comes to PCI compliance, many ISOs and acquirers are stuck in a quagmire of confusion. Following on the heels of well-publicized breaches like TJ Maxx, hackers are moving down the food chain to the next tier of retailers. Companies are realizing they can’t wait for the compliance ceiling to cave in on them.
Challenged to implement an effective strategy, companies face numerous questions: Who is ultimately liable for breaches and non-compliance? How can a sales organization ensure it is contractually covered for liability? What is the best way to detect non-compliant practices by a merchant?
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Should ISOs Consider Alternative Payments a Threat or a Blessing? |
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Two industry veterans look at the pros and cons of alternative payments. Greg Cohen of Moneris and Roy Banks of Authorize.net see different outcomes when considering whether the growth of alternative payment systems like PayPal and Google CHeckout represent a threat to the ISO business model and the flow of transaction volume.
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Legislative Update: National Breach Notification Standard Slow in Coming |
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Data breaches involving the unauthorized release of such sensitive consumer information as bank account, credit card, debit card, and Social Security numbers continue to make headlines. Yet progress on efforts to establish a federal standard for data security and breach notifications remains slow.
The Personal Data Privacy and Security Act of 2007 introduced by Senate Judiciary Committee Chairman Patrick Leahy (D-Vermont) and co-sponsored by Committee Ranking member Arlen Specter (R-Pennsylvania) is currently in the early stages of the legislative process, having been approved by the Senate Judiciary Committee and placed for discussion on the Senate Legislative Calendar.
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MasterCard and Visa have been making headlines recently. More often than not, the news has focused on the prolonged battle over interchange fees—the fees charged by issuing banks to acquiring banks for transactions routed through the card associations’ networks. Both planned IPOs to financially protect themselves from potential liability arising from interchange antitrust litigation. MasterCard earmarked $650 million of its IPO proceeds for ongoing legal costs, and Visa followed suit with $3 billion.
On one side of the debate are merchants pushing for reductions in interchange fees and, therefore, lower costs. On the other side are the card associations and their member banks, who counter that merchants may pass little of the savings from an interchange reduction on to the consumer. In the middle are government regulators, who frequently view interchange fees with a critical, if not skeptical, eye.
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Online Issues 
