Don’t look now, but 2010 is over. And it was a year like no other. Twenty-ten may well go down in history as the year the industry got serious about mobile contactless payments.
While payment businesses of all stripes have demonstrated the foresight & grit to survive & even thrive in the ongoing lackluster economy, the industry overall has faced unprecedented federal regulation, the consequences of which may not be known for years.
Passage of what came to be called The Dodd-Frank Wall Street Reform & Consumer Protection Act was one of the biggest stories of 2010. It gained momentum in Congress because of the financial upheaval of the past three years on Wall Street & a host of other factors that led to economic turmoil.
The payments industry was hit with the inclusion in the bill of debit card interchange regulation introduced through an amendment sponsored by Sen. Richard J. Durbin, D-Ill. Merchants had been complaining for years about the high cost of interchange. Bills designed to regulate it had failed previously, but now, despite the lobbying efforts of the Electronic Transactions Association, among others, the Durbin Amendment made the final cut, which passed into law on July 21.
The amendment gives the Federal Reserve the power to cap interchange rates on debit card purchases at a level the Fed deems proportionate to the costs of processing those transactions. But many wonder how the Fed can make that calculation when, as the ETA pointed out, it doesn’t understand how the industry works. Regardless, the regulations are scheduled to take effect July 2011.
Of course, it’s news whenever the PCI Security Standards Council (PCI SSC) makes changes to the standards that govern how electronic transactions are secured. Experts agree the Payment Card Industry (PCI) Data Security Standard (DSS) is now a well established, maturing set of protocols & best practices. Therefore, the changes made to it in 2010 were viewed as significant.