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PCI Co. to Increase Compliance Time for New Standards Releases |
 The PCI Data Security Council says it has made changes to its standards process that will give merchants, banks and payment processors more time to adjust to new security recommendations in the future.
The Council will release new standards for securing payment and card-related data and applications in October. But banks and merchants will have a 14-month grace period before they have to prove they're in compliance with the new standards; members will report on their compliance with the old standards through December 31, 2011.
"The main reason we're doing this is because we've had a ton of feedback," According to Council General Manager Bob Russo said in an interview with Bank Systems & Security magazine. "This is an attempt to give everyone more time to live with the standard, to understand it, and to give us feedback on it so we have more meaningful updates going forward."
The Council holds community meetings in September and October of each year, and new standards will emerge from these meetings that will take effect January 1st of next year.
Russo says he doesn't expect there will be too many surprises in the next round of standards, summaries of which will be published throughout the summer. |
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Durbin Calls Interchange Hearing for June 16 |
 While a U.S. House and Senate conference committee works on financial reform legislation, Sen. Richard Durbin (D-IL) will try to shoreup support for his amendment on interchange regulation by holding a hastily-called hearing on Wednesday June 16, before the Senate Appropriations Committee's Financial Services and General Government Subcommittee. Durbin chairs the subcommittee.
Witnesses include representatives of the Treasury Department, Government Accountability Office and Amtrak, along with Bruce Sullivan, Vice President of Government Solutions for Visa Inc., Ed Mierzwinski, Consumer Program Director, U.S. Public Interest Research Group, and Wendy Chronister, President and CEO, Qik'n EZ Stores, Springfield, Illinois.
The hearing comes as opposition to Durbin's interchange amendment began to develop in the House. Rep. Debbie Wasserman Schultz has persuaded more than 80 colleagues to oppose a Senate plan to regulate debit-card “swipe” fees.
Wasserman Schultz, a Florida Democrat and member of the House majority’s leadership team, and Kenny Marchant, a Texas Republican, are circulating the letter today to all House members urging them to fight the proposal, Wasserman Schultz spokesman Jonathan Beeton said in an e-mail. Another 81 House members signed the letter, Beeton said.
You can follow developments regarding the Durbin amendment at the Voice Of Payments, ETA's advocacy portal, which includes tools to help you contact your representatives in Congress. |
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George Mason Professor Slams Interchange Regulation |
In a new white paper, Todd Zywicki, a Geroge Mason University law professor and fellow at the International Center for Law and Economics, says attempts by Congress to regulate interchange fees are doomed to backfire, offering few benefits while increasing consumer costs and reducing credit availability.
Zywicki notes that while merchants have complained that interchange fees are excessive, the cost is far outweighed by the savings that result when card issuers assume the cost of credit risk on their behalf.
"Rather than increasing consumer welfare in any meaningful sense, interchange fee legislation represents an attempt by some merchants to shift costs away from their businesses and onto card issuing banks and cardholders. In particular, bank-issued credit cards offer a dramatic improvement in the efficiency and availability of consumer credit by shifting credit risk from merchants onto banks in exchange for the cost of the interchange fee—currently averaging less than 2% of purchase value," Zwicki argues.
The George Mason legal expert also notes that interchange regulation has been tried in Australia, with unpleasant results:
"These unintended consequences [from interchange regulation] include increased costs and fewer benefits for cardholders. This is precisely what happened in Australia—the most complete experiment to date with regulating interchange fees—when the central bank in that country artificially capped interchange fees. Credit card customers in Australia now pay more for their cards and receive less in return, and there is no evidence that consumers, including those using cash or other forms of payment, have benefited at all or that overall economic efficiency has improved," he noted.
Read the full paper here. |
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Senate Clears Financial Reform Bill |
The U.S. Senate passed the comprehensive financial reform bill yesterday by a 59-39 margin, including the amendment by Sen. Richard Durbin (D-IL), but not a controversial effort by Sen. Tom Harkin (D-IA) to limit ATM fees to fifty cents.
The bill that cleared the Senate differs from a version passed by the U.S. House of Representatives and will have to be reconciled with that bill, possibly through a formal conference procedure. It could be sent to the White House as soon as late June or early July.
For more information about the bill, visit The Voice of Payments™. |
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Senate Adopts Interchange Amendment |
Despite success in getting the U.S. Senate to require 60 votes for passage, the Durbin interchange amendment to the financial reform bill was adopted by a 64-33 margin Thursday night. Sponsored by Sen. Richard Durbin (D-IL), the measure gives the Federal Reserve authority to regulate interchange fees on debit transactions, using a "reasonable and proportional" standard that gives the Fed plenty of room for interpretation.
The amendment also allows retailers to use discounts to steer consumers to networks charging lower fees, to establish mimimums and maximums for credit card purchases, and to offer cash discounts.
If the Senate, as appears likely, passes the financial reform measure, it will have to be reconciled with a House version that does not include the Durbin provision.
ETA Chief Executive Officer Carla Balakgie said, in a statement , that the association and its members were "disappointed" by the vote and "very concerned about the impact it will have on many types of businesses in the electronic payments chain." |
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