WASHINGTON (September 30, 2016) – Five years since the implementation of the ill-conceived Durbin Amendment, customers are still not seeing savings at the register and small businesses continue to feel the impacts of this legislation. Ahead of the October 1st anniversary of Durbin Amendment implementation, the Electronic Payments Coalition calls on legislators to continue their support of repeal by backing H.R. 5465 and section 335 of H.R. 5983.
The Durbin Amendment continues to be nothing more than a merchant markup allowing big box retailers to pocket more than $36 billion to date—impairing small mom and pop stores and hurting customers in the process.
“The numbers don’t lie: the Durbin Amendment has been a complete failure for everyone except the big-box stores, who have padded their bottom lines to the tune of six to eight billion dollars each year,” said Molly Wilkinson, executive director of the Electronic Payments Coalition. “Once consumers find out retailers aren’t keeping their word and passing on savings through lower prices, a majority of consumers support repealing the Durbin Amendment, making it imperative Congress supports efforts to end this amendment.”
Independent data demonstrates this legislation also harms community banks and credit unions. These small financial institutions, which provide small business support and growth opportunities in communities across America, face higher costs to comply with all of the unnecessary provisions of the amendment and have seen a substantial drop in interchange revenue because of the Durbin Amendment.
But consumers aren’t just impacted by big box retailers’ anti-free market ploy—they are also hurting from retailers’ failure to implement strong data security standards that would better safeguard customers’ personal and financial data.
“Banks and financial institutions comply with the requirements of the Gramm-Leach-Bliley Act (GLBA) because they are vested in protecting their customers’ information and helping financial breaches to decline. The same effort should be required of others that handle sensitive customer data,” said Wilkinson. “As the number of retail breaches continues to grow, there needs to be similar standards on the retail side. Collaboration is key to best protecting consumers.”
In fact, innovation in the payments and security space is a key priority for financial institutions, especially as consumers overwhelmingly rely on these entities to advance the future of payments. Just six percent of consumers trust stores and retailers, but the majority — three in four consumers — trust banks, credit card companies, and other financial institutions to develop new payment technologies.
These innovative efforts seen over the past year enabled the necessary strides to equip Americans with EMV chip cards and certify merchants to accept these cards.
For those who have upgraded, EMV chip cards have already translated into a decline in counterfeit fraud–benefitting customers, merchants, and financial institutions.
Because chip cards have been successful in better protecting card data, criminal activity is shifting to other types of fraud, such as malware and card-not-present fraud. This is leading to a “record setting pace” of breaches, surpassing 2015’s high numbers, according to the Identity Theft Resource Center.
“Given the numerous recent big-box retailer data breaches, the Data Security Act of 2015 (H.R. 2205) provides common sense standards that protect consumer information when in the hands of retailers now more than ever,” said Molly Wilkinson, “Unfortunately, retailers aren’t in favor of these standards and have resorted to making claims about the bill that are simply untrue. If retailers were accountable for implementing these measures, it’s likely many of the recent high-profile data breaches could have been prevented.”
EPC calls for strong national data security standards to better protect their customers’ sensitive information. H.R. 2205, the Data Security Act of 2015, would hold retailers to similar standards as financial institutions, which 90 percent of consumers support, and EPC urges Congress to pass the legislation.
To learn more, visit https://epc1.wpengine.com/. The Electronic Payments Coalition has compiled a list of recent breaches impacting consumers which can be viewed at: https://epc1.wpengine.com/resource/technology-mandates-dont-work-incidences-of-fraud/.