August 24, 2016
CNP Expo: I’m From the Government and I’m here to Help
May 21, 2014
The relationship between the federal government and the payments industry often is adversarial because of the perceived burden of increasing regulation, and a recent move to push responsibility for bad actors onto payments companies is not helping, according to panelists at the CNP Expo on Wednesday afternoon. The panel updated Expo attendees on the government’s latest efforts at consumer protection.
“Payment processors are in a difficult spot. Feds are saying, ‘You need to do a better job of vetting the merchants,'” said attorney Ellen Berge of Venable LLP.
Merchants feel the initiative is turning payment providers into police. Companies that simply collect funds now are being held liable for the deeds of shady marketers.
“It’s a different strategy. If [government agencies] get to a chokepoint, they can have a more effective impact,” Berge said. “But, there are a lot of investigations into legitimate payment processors. The theory is that these payment processors have aided and abetted these actions.”
The payments industry wants to set its own guidelines and avoid government requirements.
“Mandates from government would not be optimal,” said Tom Gannon of MasterCard. “You have regulators that want to define what fraud is and what should they do about it when they see it. We feel strongly that the industry is able to determine what is illegal. We believe the answer is not to force the payments industry to be the police force.”
The EMV chip, which becomes mandatory in two years, is part of the answer, but only part. The card contains an electronic chip and cannot be counterfeited, but criminals are expected to turn to other ways of profiting.