PYMNTS.com: What’s Next in Regulation

PYMNTS.com’s Regulation Center will bring you “what’s next” in Regulation by bringing you up-to-date commentary and news on the impact of this regulation to the industry’s business, business models and opportunities for innovation.

Government regulation is forcing change throughout the payment card business in the United States.  Like it or not companies will have to do things differently. Old sources of revenue are disappearing and past ways of doing things simply won’t fly with regulators.  These changes are so broad-sweeping that theose in the payments business can’t just leave only to  their lawyers and compliance folks to sort  out. Everything regulatory, including the far-away glimmer in some Congressman’s eyes, is fair game.

Much of our focus will be on the two big shocks that will hit the payments industry as a result of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

 
1. The Durbin Amendment just may eliminate the preponderance of the interchange fee revenues that debit card issuers receive and, when combined with the Overdraft Fee Legislation, challenges the economics of the retail banking business.  If that happens, and it just looks like it might,  financial institutions will be forced to search for a new profit equilibrium which will involve new pricing and products. The wild card is TCF – maybe it will slow the Fed down or stop them altogether – or perhaps something else will happen.  We’ll be watching. 

 

2. The Consumer Financial Protection Board (CFSB) is much more unpredictable.  Professor Warren (the current “caretaker” so to speak) says they are going to focus on disclosure.  More likely, this new agency will be populated by experts in behavioral law and economics and be looking at financial products through that lens.  The CFPB’s Director has sweeping powers and it remains to be seen how that person, and the agency she runs, will view the products the payment industry sells and how it sells them.

 

Dodd-Frank comes of course on top of the CARD Act.  That has already eliminated many long-standing credit card practices and forced a wholesale re-equilibration of prices by issuers.  And more is yet to come.  The PYMNTS.com Regulation Center will cover what’s next.

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TCF Bank Files Lawsuit Challenging The Durbin Amendment of the Dodd-Frank Act

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The Economics of Payment Card Interchange Fees and the Limits of Regulation

Tick Tock Goes the Durbin Clock- Eight Months to go on Debit Card Regulation

Dealing with Durbin Briefing Room