Recently, federal lawmakers formed two congressional electronic payment caucuses. These committees, known respectively as the Congressional Payments Technology Caucus and the Senate Payments Innovation Caucus, were created by Congress to explore new and innovative technologies in the payments industry and address issues concerning data security, consumer protection and electronic payments.
While it isn't the first time the industry has been under the watchful Washington microscope, this action marks the first official legislative initiative to look further into the industry's inner workings and its technologies. It also follows an intensive 2014 effort by the Obama administration to put a framework around cyber security – a highly sensitive matter which though mutually exclusive, is tacitly connected to electronic commerce.
Maybe not so coincidentally, these government power-plays came on the heels of two other federal agency efforts to examine and regulate facets of the payments industry. Both initiatives, in their own right, sparked much debate from within and outside the industry's walls. The Durbin interchange amendment to the 2010 financial reform bill brought the subject of interchange into the public eye, challenging interchange fees and network routing practices for the first time in history. Similarly, the 2013 Department of Justice Operation Choke Point program openly scrutinized the high-risk sector of the industry.
The increased oversight from Washington also occurred in tandem with some of the nation's largest financial data breaches and came on the heels of a serious U.S. financial services collapse that led to what some refer to as the Great Recession. Therefore, industry officials have been quick to recognize the increased government attention has been driven, in part, by Capitol Hill's desire to protect consumers.
Scott Talbott, Senior Vice President of Government Affairs and head lobbyist at the Electronic Transactions Association told The Green Sheet several factors are playing into recent policy maker interest in our industry. First, Talbott pointed to the industry's technology-driven framework and its rapidly changing landscape. "The magnetic stripe technology we've used forever in the U.S. for card-based transactions is now being replaced," he said. "In the last year or two, there has been an explosion of technology in the industry, and lawmakers are taking notice because it's sexy, cool, slick, and it's all good."
Talbott also tagged consumer protection and data breaches as two big drivers behind lawmaker interest in the industry. "Even though these [breaches] may have been isolated, policy makers view the payments ecosystem as a continuum, and they feel each incidence affects everybody," Talbott said.
According to Talbott, most regulators are in the information-gathering mode and taking steps to understand the new playing field by actively learning and asking questions. He said the U.S. Congress is taking the same role, but at the same time, its members are looking at what it will take to create a uniform national standard for data breach notifications. Talbott said that with 47 different state laws now regulating how the sharing of information about cyber threats is distributed, "Congress is trying to make things clearer and simpler by creating one uniform national standard."
As a result, two proposed laws are moving through Congress, which will create a more legally certain process for handling a cyber threat and remove restrictions, allowing information about threats to flow more freely. New laws, when in effect, will act like existing anti-trust and privacy laws by putting an early warning system into place.
Talbott also confirmed the ETA has been working with Congress and has helped policy makers with creation of the new bi-partisan congressional caucuses. In a public statement, Jason Oxman, ETA Chief Executive Officer, said, "ETA member companies are the world's leading payments innovators, deploying mobile payments and other technology that powers commerce for merchants and their customers. We look forward to working with caucus members to advance policies that promote innovation and economic growth through payments technology."
Talbott believes the two new committees will enrich the industry, as they include the members of the House and Senate who care most about the electronic payments landscape. He said these invested members will "focus on the payments ecosystem as a whole and the innovations underway within the industry."
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