The complexity of the modern electronic payments industry was onfull display in Washington as the Federal Reserve Bank staffawkwardly attempted to explain to the Federal Reserve Board howthey arrived at the draft rules for new section 920 of theElectronic Fund Transfer Act (EFTA Sec. 920).This group had theunenviable job doing what would be the equivalent of becoming anexpert in an entirely new language in a few months.There’s noRosetta Stone for the payments industry and a glance through themeetings leading up to the rule-writing indicates the willingnessof the Fed to consider a wide range of viewpoints.But, even a groupof very smart individuals can only learn so much, so fast.
At the end of the day, the FRB relied on the letter of the lawand made a narrow interpretation of a narrow statute with theresult that a majority of debit card issuers are going to beoperating their programs on a revenue model that has been slashedby 75% or even more.On the opposite end of the transaction, manymerchants are going to see their operating costs improved; somedramatically.In between lays a confusing mix of marketopportunities and competitive challenges, along with a long, longlist of questions yet to be answered.
These paragraphs mark the beginning of our special report, TheDurbin Amendment: An Initial Analysis of the Draft Rules, which canbe downloaded in its entirety from our website, www.mercatoradvisorygroup.com.
In it, we consider the impact of the proposed rules across arange of stakeholders and provide a convenient list of questionsposed by the Fed.
We’re confident this will be the first analysis of many – HappyHolidays!