The Green Sheet Online Edition
November 10, 2008 • Issue 08:11:01
Q&A with the ETA
The Electronic Transactions Association held its annual Strategic Leadership and Networking Forum on Oct. 22, 2008, in Chicago. According to Linda Mahy, President and Chief Executive Officer of payment consulting firm ConnectiveIQ and forum panel discussion facilitator, over 200 payment executives attended. Discussion focused on identifying the issues affecting the payments industry and implementing strategies to cope with them. Mahy spoke with The Green Sheet shortly after the forum.
The Green Sheet: What was your overall sense of the day and how the Forum discussion went?
Linda Mahy: I thought it was absolutely outstanding. It was really full-on with a lot of emotion. Paul Garcia, President and Chief Executive Officer of Global [Payments Inc.] did our keynote, and after he talked, you can only feel good and excited about the payments business. He put things in a very positive light for everyone there.
GS: What were some of the things he discussed?
LM: He focused on emerging sectors like mobile and exporting globally to new markets. And his presentation on the international marketplace was fascinating. I think the positive message is that if you're on a growth curve, just hang in there, and don't do any fire sales.
GS: Who was on the forum panel?
LM: Well, there was Mary Dees Griffith, a payment consultant and industry veteran; Nick Baxter, who is, of course, an attorney and the President of the ETA; Jan Estep, the President of NACHA, as well as two attorneys and a lobbyist.
GS: What was one of the hotter topics?
LM: People seemed to be pretty roused about the tax reporting law [HR 3221, requiring merchant credit and debit card transactions be reported to the Internal Revenue Service] because it's going to require changes and upgrades to a lot of accounting systems.
GS: What will be some of this law's repercussions?
LM: The impact on payments is that we will need the necessary solutions to capture and validate the TINs [tax identification numbers], as well as deal with FTC compliance. FTC auditors going out now are expecting to see better practices.
GS: How does the payments industry combat this?
LM: Well, Mary Dees told the audience to get their acts together. If you're not ready with contracts, you'd better get ready. The FTC is coming out, and the fines are going to be big. So make sure that you have copies of your contracts with your ISOs and with your merchants all the way up and down the food chain. Major fines will accompany less-than-full disclosure. If there have been any changes to your merchant contracts and they haven't been initialed and approved by the merchants, you'd better go back and renegotiate. The panel really pounded on the audience about disclosure and data security. So we have to make sure that when the FTC examiners come out, our people are locked and loaded. I think the real message here is get ready; the government is coming.
GS: Since merchant credit and debit transaction reporting is now law, will the ETA and its members have a voice in how HR 3221 is implemented?
LM: Exactly that was the message. Mary Dees screamed that to the whole room. Reach out in your communities; get to your representatives; be the proactive voice.
GS: What are some things the ETA is doing specifically as the international trade association representing the payments industry?
LM: The ETA was very vocal and spent months in an effort to get Capitol Hill to veto that bill. Though we were not successful, we are publishing a best practices manual for FTC compliance. You're going to see some really good reporting from the ETA now and in the future, and I think people at the forum were relieved about that.
GS: Ultimately, what will be the biggest effect on payments from all the legislation on Capitol Hill?
LM: The reality is that oversight is about to come down on this industry in a big way. Tax reporting is just the tip of the iceberg. And federal oversight is fallout from years of decreasing government confidence in payments. Capitol Hill is doing what they feel they need to do, but the danger is now people are going to come in to mandate this oversight, even though they don't know anywhere near as much about our industry as we do.
GS: How did it get this far?
LM: Well, it is scary. We're all angered by it, but we have to take responsibility for screwing up. I mean the data hackings - they happened in our value chain and on our watch. Additionally, what we did was set up a lot of whistles on Capitol Hill with all those lawsuits. We basically said, 'Come look at us, we're out of control.'
GS: What does the payments industry need to do to prevent further onslaught of legislation and litigation?
LM: For one, the ETA is going to be the leadership body, not only with lobbyists on Capitol Hill to stop ridiculous legislation, but to keep uninformed people from performing this oversight. We, as an industry, need to raise their faith level and get them to believe that we are responsible within our own industry. We just need to calm it down and get back to taking care of ourselves and showing that we're self-sufficient.
GS: Do you see the litigious activity settling down?
LM: I think we are going to settle down because we've got bigger fish to fry. We've got bigger enemies now - and the enemies are not us. We need a united front now more than ever, especially on Capitol Hill. And we need to act much more reasonably if we're to come through this and remain a free-market economy.
GS: What else is paramount to our success in weathering this storm?
LM: I believe we need to be collaborating more with retailers. I think if we had better relationships with our merchants, those lawsuits might not have gotten as out of control as they did. I also feel that those outside of our industry understand that the banks, the processors, the ISOs and the ETA hold very responsible positions in the value chain. And we simply all need to work together to protect it.
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