’We Can’t Let Our Guard Down’

Be careful what you wish for. For years, payments processors have contended that state and local lawmakers and regulators would enact better regulations if they were better-informed about how payments work. The good news is that’s now happening. The bad news is that state lawmakers’ understanding of the payments business remains fragmentary.

That’s what Kim Ford, senior vice president of government relations at Fiserv Inc., told attendees last month at the annual meeting of the Electronic Transactions Association in Las Vegas.

We agree, though we would add the need for outreach is even more urgent at the federal level. More on that shortly.

“Legislatures know payments are important, and are a little bit smarter. It means we [still] have a responsibility to educate them about how payments work,” Ford said. The job is especially difficult with state and local governing bodies, where lawmakers can change every few years. “We’re always starting from scratch,” the lobbyist said.

The onset of the pandemic didn’t help. Ford pointed to an executive order in Georgia in 2020 to “suspend the use of PIN pads” in that state, ostensibly to help control the spread of the Covid-19 virus. “The governor didn’t know that with [electronic benefit transfer] cards, you have to enter a PIN,” Ford told the audience. Unwittingly, the governor “was cutting off access” to a crucial benefit at the very time the pandemic was underscoring its need, she added.

More recently, California legislators proposed rules to hold payments processors liable for products sold by online marketplaces and found to be “faulty.” Industry lobbying succeeded in stopping the proposal, but its emergence in the first place was “scary,” Ford said.

“Lawmakers know payments are important, and are a little bit smarter about” payments,” Ford said. But it remains for the payments industry to be vigilant about proposed legislation affecting payments, she added. “It means we have a responsibility to educate them.” Still, even with better-educated legislatures, “sometimes strong voices from processors get lost in the shuffle,” Ford lamented.

But the payments industry can’t afford just now to let its voice “get lost in the shuffle” at the federal level, where the stakes are about to get much higher. Activist directors installed by the Biden administration at several agencies—including the Consumer Financial Protection Bureau and the Federal Trade Commission—are demanding answers from the industry on matters ranging from the buy now, pay later craze to how complaints and consumer data are handled. There’s even a possible resuscitation of Operation Choke Point, an Obama administration practice that held processors accountable for the misdeeds of their clients.

Lobby hard, payments pros.

—John Stewart, Editor, john@digitaltransactions.net