In an opinion piece published in The Hill, Molly Wilkinson, executive director at the Electronic Payments Coalition, takes issue with another blog written by Merchant Payments Coalition Chairman and National Retail Federation SVP Mallory Duncan. Mallory’s piece suggests Congress should get into the interchange setting business again as they did with the Durbin Amendment and consider legislation to adopt a new model similar to what is being used in several European countries, Australia and elsewhere.
The failings of price fixing can be found abroad as well. In Australia, price fixing caused consumer fees to increase by $480 million, while retailers there walked away with $850 million a year in handouts. In the UK where rates were recently capped, there is no evidence that savings are being passed on to consumers and customers are already seeing rewards programs slashed as issuers try to make up for lost revenue.
Not only is Duncan pushing a policy that has failed the world over, but he is asking Congress to wade into a business negotiation that has already been resolved in the courts. In 2013, after over a decade of court-monitored negotiations, merchants, card issuers and networks reached a $6 billion dollar settlement regarding credit interchange fees. The deal included a cash payout, as well as rule changes that give merchants new ways to negotiate acceptance costs and the ability to pass costs on to consumers with checkout fees. And yet, in spite of all of these new options, merchants have chosen to go to Congress to ask for more money instead of engaging in honest negotiations.
Mallory Duncan’s original piece can be found here:
Regardless of which side of the controversy your opinions lie, it’s important to understand that the issues surrounding interchange which have been bubbling for a decade or more are far from over. Participants in the payments industry need to think about impacts to their business of changes in interchange, including the impact legislated interchange may have on new product adoption for products that rely on interchange and the payment rails.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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