As the world faces COVID, there is increasing friction by merchants who claim that card fees represent a “bigger burden,” as the Wall Street Journal recently reported. Some sources say that anticipated rises in interchange will cost merchants an additional $900 million at a time when business failures are expected to rise due to events surrounding pandemic. Payment networks responded by delaying their increases, but as is the case with many COVID-lifelines, a year after COVID raised its ugly head, many countermeasures expire.
And, now, Dick Durbin, who helped bring debit card pricing controls to the U.S., is back on the interchange trail, this time, with Credit Cards in mind.
In contrast to merchants, who organized under various trade groups, the payment industry is fragmented by competition. The environment will change as the industry joins a group to provide a more unified response. According to the press release by the Payments Leadership Council,
- Today the chief executive officers (CEOs) of American Express, Discover Financial Services, FIS, Fiserv, Global Payments, Mastercard, and Visa announced the launch of the Payments Leadership Council (PLC).
- The PLC will bring together the CEOs to share their unique insights on the innovations that have enabled leadership in global commerce and economic growth in order to promote effective public policies responsive to current and future challenges facing the U.S. economy.
- Over the past year, electronic payments have helped businesses of all sizes adapt to the pandemic’s challenges.
- As the nation moves toward long-term recovery, the CEOs remain committed to working with both policymakers and the business community to utilize electronic payments to keep businesses open, accelerate economic activity, and protect customers and employees.
The press release includes the top players in global credit card payments:
The following statement can be attributed to the CEOs jointly –
- Stephen J. Squeri (Chairman and CEO of American Express),
- Roger Hochschild (Director, CEO, and President of Discover Financial Services),
- Gary Norcross (Chairman, President, and CEO of FIS),
- Frank J. Bisignano (President and CEO of Fiserv),
- Jeff Sloan (CEO of Global Payments),
- Michael Miebach (CEO of Mastercard),
- Alfred F. Kelly Jr (Chairman and CEO of Visa)
Here is a link by those business heads, as they announced the formation to Majority Leader Schumer, Speaker Pelosi, Minority Leader McConnell, and Minority Leader McCarthy on March 2.
Heading the group is a person you will well know if you follow the CFPB:
Former Deputy Director of the Consumer Financial Protection Bureau (CFPB) Raj Date will serve as the PLC’s Founding Director. Date, a longtime investor in and advocate for the promise of financial technology, will establish the PLC as a forum for industry CEOs to share their perspectives on the public policies and payments solutions that will expand global commerce and drive inclusive growth.
While the Payments Leadership Council is in its early stages, we await an announcement on their schedule, but three topics to expect are:
- Credit card interest rates: How will legislation to cap interest rates affect potential borrowers? How will reduced credit availability affect the economy?
- Credit card interchange: With increases in electronic commerce, which will cover the incremental risk? Will a reduction in interchange tighten access to the marginally qualified?
- What is the long-term view of payments in the U.S.?
There are common themes that credit card issuers contend with, so the goal is noble. The big thing to watch will be execution and how the organization can bring steadiness into the process as the global economy tries to get back on its feet.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group