The Green Sheet Online Edition
November 28, 2016 • Issue 16:11:02
Presidential election's impact on payments
We've heard from several readers who would like to hear what payments industry leaders anticipate the impact the Nov. 8 presidential election will be on our sector. This matter is naturally of interest to all parties on the payments chain, and we will cover developments as they occur. We, at The Green Sheet, expect that after President-elect Trump takes the oath of office in January 2017, his actions will give us much to report on, and we will follow this story as relevant developments occur.
In the meantime, the payments industry experts at The Strawhecker Group interviewed pundits and industry experts to get an initial impression of what changes the election might bring ‒ including potential positives, negatives and unknowns. They published their initial findings in a paper titled "Election Impact on the Payments Industry ‒ TSG's Take."
The following excerpt, quoted verbatim, lists the potential positives TSG researchers found:
- Wall Street's rally, particularly for national and regional banks, over the last 48 hours likely occurred because the president-elect's transition team has stated that the 2010 Dodd-Frank will be dismantled. This has been further buoyed by his encouragement of an interest rate hike which has given major bank stocks fuel for a rally in price.
- With a new Attorney General set to be named, it is likely that Operation Chokepoint will be shut down by the Justice Department. The operation was criticized across the industry as it attempted to hold payments companies liable for the fraudulent actions of their customer merchants. This is akin to a computer manufacturer being accountable for a hacker committing a crime.
- The Consumer Financial Protection Bureau will likely be targeted for reform by changing the current Executive branch reporting structure. Previously held unaccountable to Congress, the CFPB will be held with a tighter leash. While many actions of the group have been seen as sensible and needed, others have been seen as misguided, stifling some payments companies.
- One of the platforms of President-elect Trump's was to curb federal regulation, which would indicate that further Durbin Amendment pricing regulation on credit cards is unlikely.
- The implications of Republicans holding the House, Senate, and Executive branch on tax policy are potentially very impactful. For example, strategies over how payments companies structure themselves will be top of mind if the corporate income tax rate is indeed lowered to 15 percent, as Trump has proposed. Further, if this lower rate is indeed enacted, the reinvestment of this windfall into the market will likely lead to explosive growth, ultimately driving up consumer spending – the lifeblood of the economy and the payments industry.
The paper's full text is posted at http://bit.ly/PaymentsImpact.
What do you think is in store in 2017?
Are you optimistic about your business prospects for 2017? We'd love to hear what you expect the next several months will bring and what you're planning to do to thrive in our always changing environment. We will welcome your thoughts at firstname.lastname@example.org.
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