LAS VEGAS–The financial-services industry has lost the battle against debit interchange regulation several times over, but some executives are still fighting the good fight.
Executives at the ATM Debit & Prepaid Forum, an annual industry conference sponsored by ISO&Agent Weekly publisher SourceMedia Inc., on Nov. 2 could not resist taking a few jabs at the regulations slashing their long-cherished debit card interchange fees.
Banks could lose more than $5 billion in annual revenues as a result of the Dodd-Frank financial reform law, which resulted in the Federal Reserve Board slashing fees in half that merchants pay issuers when customers make purchases with debit cards.
The caps went into effect Oct. 1, despite the banking industry’s furious, repeated efforts to have that provision of the law repealed or delayed. And some industry members are still smarting from the defeat.
“We’re only 33 days into the new era of government price-fixing,” Leland Englebardt, MasterCard Inc. group head of global network products, said during a panel discussion, generating a round of applause from the audience.
He later declined to comment to the panel “on whether the government’s actions in any respect are justified or unjustified. They are what they are.”
Englebardt and executives from Visa Inc., Discover Financial Services, and other transaction networks spoke during a presentation during the forum.
“Price-fixing” became a familiar refrain from MasterCard and Visa Inc. last year as they urged Congress and the Fed to reconsider the debit-interchange regulations.
But that language is a double-edged sword in the long-running interchange battles between issuers and retailers. Both sides regularly toss around words that most have not heard much since their high school comparative government class.
Merchants are especially fond of calling Visa and MasterCard a “duopoly” or “cartel.” Retailers have long protested the ways the world’s two largest payments networks determine the prices that acquirers pay to accept debit and credit cards.
And several opponents have accused Visa and MasterCard of “price-fixing” themselves. Just last month, a group of ATM operators filed a lawsuit against the networks alleging just that.
As Heidi Moore, the Wall Street correspondent for MarketPlace Radio, wrote on Twitter on Nov. 2 that “MasterCard seems to like price-fixing better when it's their idea!”
