PayThink

Banking has less in common with industries like music and entertainment than it does with long-entrenched pharmaceutical, grocery store and airline businesses — all of which can absorb the threat of new entrants by adapting to them.

When costs plummet but prices stay high as ever, a market is clearly not working properly. But that's what is happening right now in the business of processing credit- and debit-card transactions, thanks to price-fixing that harms not just merchants but consumers and the entire economy.

Lyle Beckwith of the National Association of Convenience Stores argues that debit card interchange is unfairly high. But this argument ignores several key points.

JPMorgan chief Jamie Dimon tried to defend his bank's size and scope by suggesting that community banks are just as vulnerable in a crisis. But he succeeded only in proving that Wall Street firms will make the same mistakes all over again unless the government takes steps to disincentivize their risky behavior.

While the CFPB's proposed rules may force payday lenders to adjust their business models, well-meaning ones should be able to operate in this new framework.

Merchants argue that Fed policy allows banks to overcharge stores for debit-card swipe fees, resulting in higher prices for consumers. But the revenue banks earn on interchange fees benefits all Americans, since financial institutions invest a portion of it in developing security technologies to protect consumer data.

With the card issuer mandate for EMV-ready merchants around the corner, are you prepared?

It's ironic that banks want to streamline the regulatory structure when their own structures are hardly paradigms of simplicity. Rather than weaken rules or consolidate agencies, we should focus on improving the quality of oversight — and on reducing banks' complexity.

Any banker considering filing an appeal against examination findings will first weigh the drawbacks of irking regulators. This explains the surprisingly small number of appeals that regulators have received in the last few years.

Come October, all payment card issuers, merchants and acquirers will have to make the switch to the EMV standards. Any party that doesn’t go through with the upgrade by the deadline will likely experience an increase in fraudulent payment card liability.