 |
| WASHINGTON - NOVEMBER 23: Federal Reserve Bank Board of Governors Chairman Ben Bernanke participates in the open portion of a meeting of the Financial Stability Oversight Council at the Treasury Department November 23, 2010 in Washington, DC. Created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the council is charged with identifying and responding to emerging risks and threats to the financial stability of the United States. (Image credit: Getty Images via @daylife) |
WASHINGTON--()--The Merchants Payments Coalition criticized the Federal Reserve for making merchants pay for fraud prevention even if banks don’t prevent fraud.
Although the Fed found that merchants bear 41 percent of signature debit fraud losses and 74 percent of such losses for "card-not-present" transactions, its rules now require them to pay fees that cover 100 percent of fraud-prevention costs incurred by issuing banks.
Under debit-card reform that took effect in October, the Fed was to ensure that banks actually take effective steps to prevent fraud and decide how much of the cost of preventing fraud the merchants and the banks should bear.
Instead, the Fed rule rewards banks with more merchant funds if they self-determine that they prevent fraud. That will not be effective and regulators should have to find that the banks actually reduce fraud before they get more funds.
U.S. banks lag much of the rest of the industrialized world in technology to make card transactions safer and remain mired in 1970s-era technology, in part because the less-safe transactions (signing for a debit card purchase rather than using a PIN number) have historically been more profitable for the banks.
The coalition believes it is unfair for the Fed to saddle merchants with the costs resulting from this purposely outdated technology.
Instead the Merchants Payments Coalition believes that with this ruling the Fed is abdicating its regulatory role and simply allowing more money to flow to banks that issue debit cards.
Nothing in today’s ruling actually decreases fraud. This is inherently unfair to merchants who already bear nearly half the cost of preventing fraud.
The Federal Reserve Board’s final rule, which goes into effect Oct. 1, allows non-exempt issuers to collect a 1-cent fraud prevention adjustment on debit card transaction revenues, so long as issuing banks self-certify that they meet the Fed’s fraud prevention standards. This fee, in addition to a 0.7 percent fee for fraud prevention costs already included in the interchange fee, would place the entire cost of fraud prevention on the backs of merchants.
This final rule the Fed announced Friday is the same amount as the preliminary rule. The Fed is responsible for the details of enforcing debit reform passed by Congress in 2010 as part of the Dodd-Frank bill created to prevent another financial crash.
The Merchants Payments Coalition (MPC) - www.UnfairCreditCardFees.com - is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees.
Advertisement
We create and build industry-related "breaking news" websites. Our "NewsBots" search for breaking news on keywords relating to your industry. Any vertical, any niche, any subject and we can build it for you.
Example: Take a look at the "Breaking News Site" we built for the NBA's Miami Heat. NBANewsHeat.com Our NewsBots look for keywords (Lebron James, Dywane Wade, Chris Bosh, etc.) Once the breaking news story is found, it sends it to our server, which transforms it into a Post containing the title, a photo, author credit, 25 word blurb and a direct link to the original content provider. Better than the Drudge Report, and not limited to the political arena.
To get details, go to Breaking News = Traffic and learn how your industry related breaking news website can be a "targeted" traffic magnet.
