WASHINGTON — A group of technology firms sent a letter last week to senators urging them to support a delay to the Durbin interchange amendment, citing privacy concerns and fears about the security of debit transactions.
TechNet, a group that includes Apple, eBay, Google, HP, Facebook, Microsoft, and Yahoo sent the letter asking senators to support a bill by Sen. Jon Tester, D-Mont. that would delay the interchange rule, which would limit interchange fees on debit cards, for two years.
"While clearly not its intent, the Durbin amendment will drive networks to cut costs by routing consumer's financial transactions through cheaper networks regardless of a network's security or functionality," wrote Rey Ramsey, president and CEO of TechNet. "The proposal would also affect existing networks' operations. Today, robust protection of financial data is the priority. But under the new regime, cost?savings will become the number one priority, a situation that could reduce the incentive for ongoing investments in security infrastructure. The new regime would also make it more difficult for banks and other financial institutions to quickly and efficiently identify fraud and other financial infringements on networks operating with minimal security components."
Tester is being supported by the banking industry, which argues a Federal Reserve Board proposal to implement the Durbin amendment does not properly account for the costs of fraud prevention. Sen. Richard Durbin, D-Ill., who authored the provision, has been fighting bank efforts to delay or repeal the measure.
TechNet warned that the Durbin amendment will have substantial unintended consequences that will threaten the security and privacy of consumer's transactions.
"The additional time proposed by Senator Tester is a common sense solution that would allow all the parties affected by the Durbin amendment — consumers, banks, merchants and network operators — to assess more fully the potential cyber-security threats posed to financial transactions and develop and adopt any necessary solutions to address such possible risks," Ramsey said.