Payments: What's in Store for 2016

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Payments: What's in Store for 2016

By Hannah Walker, Director, Government Relations, FMI - 01/20/2016

The year 2015 was busy in the world of payments, and 2016 is shaping up to be just as consequential. The Food Marketing Institute (FMI) has long been a leader in developing policy and best practices with regards to electronic payments in the grocery industry. FMI brings together merchants to identify growing challenges, trends and opportunities in payments. With 2016 upon us, we wanted to share what we see in store for the grocery industry over the upcoming year.

All eyes will be on the European Union (EU) in 2016 during its first year of interchange fee caps that banks and credit card companies can charge merchants. In 2015, the EU capped interchange on credit at 0.3 percent and debit transactions at 0.2 percent. The EU recognized the market power the card companies hold and the hidden cost high interchange fees had on consumers. The caps went into effect in December 2015 and our merchant members are closely watching how EU consumers and merchants will benefit from them.

This year, the Federal Reserve Board (FRB) is required under the financial reform statute to review its rule on debit interchange fees established in the "Durbin Amendment." Many merchants have not seen the savings that Congress intended; some merchants have actually seen their costs go up. Merchants have seen new fees introduced since the rule was enacted, even as the banks have reported their cost of processing debit transactions going down. These developments will be raised and should be considered by the FRB as it re-examines the rule.

This year, the Federal Reserve Board (FRB) is required under the financial reform statute to review its rule on debit interchange fees established in the "Durbin Amendment." Many merchants have not seen the savings that Congress intended; some merchants have actually seen their costs go up. Merchants have seen new fees introduced since the rule was enacted, even as the banks have reported their cost of processing debit transactions going down. These developments will be raised and should be considered by the FRB as it re-examines the rule.

Finally, we would be remiss if we did not mention this year's presidential election. National security will likely continue to be center stage. Congress ended 2015 with a landmark cybersecurity bill that provides liability protections to companies that share cyber threat information through a Department of Homeland Security (DHS) portal. Merchants will work with DHS to ensure the portal is a useful tool in combating these ever-growing threats. While we cannot expect any great legislative wins while Congress and the country are focused on elections, FMI will continue to press for a federal data security and breach notification bill.

Grocers invest hundreds of millions of dollars every year to protect their customers' sensitive payment information. FMI will continue to advocate on behalf of our members for a clear, thoughtfully written federal standard that will take into account the unique needs of all it will cover and ensure that the customer is effectively and timely notified with useful information in the event of a breach.