Payments Firms Need To Keep Their Eyes on Regulators And the States, ETA Lobbyist Says

Regulators and the states currently are more active than Congress on issues affecting the payments industry, according to the Electronic Transactions Association’s point person on governmental affairs.

The divided Congress probably won’t pass any major payments-related legislation before the 2020 elections, says Scott Talbott, a senior vice president at the Washington D.C.-based payments-industry trade group. Talbott reviewed public-policy issues Tuesday at the Southeast Acquirers Association annual conference in Atlanta.

Talbott said Congress seems more partisan than at any time in the 25 years he’s been tracking Capitol Hill. “The mood in Washington can best be described as vitriolic, acerbic, combative—any negative term that you can think of, that’s what Washington is right now,” he said.

Still, Congress could latch onto a pro-consumer issue such as privacy. Some advocates are clamoring for more disclosures from businesses, more rights for consumers to opt out from marketing pitches, and the so-called right to be forgotten, in which search engines and social media pass over consumers who request to be left out of the Internet.

“Privacy is a huge issue both within Washington and the states,” said Talbott, predicting that the United States will have a national privacy law “at some point.”

While most businesses want to be regarded as pro-consumer, the payments industry would object if a privacy law prevented it from holding card and related consumer financial information necessary to prevent fraud, according to Talbott. Otherwise, “the crooks will have a field day,” he said.

On the regulatory front, Talbott noted that a number of proposals are pending regarding financial-technology companies. The ETA assesses many as “very positive,” according to Talbott.

But he noted that the Office of the Comptroller of the Currency’s plan to make fintechs eligible for national-bank charters is being challenged by some states in court. He also reminded his SEAA listeners that the Federal Reserve is considering whether to take a direct operational role in a real-time payments system, which might or might not be a threat to private payments companies.

“We welcome competition from the federal government so long as they price their service competitively,” Talbott said.

It’s at the state level, however, “where we have some real challenges,” said Talbott. Returning to the privacy issue, he said about a dozen states, including California, are considering various protection measures. For ease of compliance, banks and payments companies have long argued for a single national standard on privacy and related issues.

“The risk there again is we have a patchwork of state privacy laws, and very difficult to comply with,” Talbott said.

Then there is the perennial issue of taxes. “A lot of state budgets are suffering, and they are looking to our industry for taxes,” said Talbott. Some states even believe processors should remit sales taxes daily, a task Talbott says they’re not prepared to do.