MRC Advocacy Update - Voice of the Merchant
• MRC Supports the Federal Reserve Boards Proposed Change to Regulation II
The MRC will send a letter of support to the Federal Reserve Board regarding their proposed changes to Regulation II (Debit Card Interchange Fees and Routing), which states that debit card issuers should enable and allow merchants to choose from at least two unaffiliated networks for card-not-present debit card transactions, such as online/eCommerce purchases. The Federal Reserve Board views these clarifications of Regulation II's existing requirements as necessary in light of information indicating that often, only one network is enabled for such transactions. See related press release here: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210507a.htm
Next Steps:
While we have heard from several members, we would like your input on this matter before we finalize our response. Please send your feedback to una@merchantriskcouncil.org.
• MRC Updates to UK regulators on impact of increased Debit Card Interchange Fees
The MRC met with the UK financial regulators (FCA and PSR) this month to discuss their plans to address interchange fees and excessive increases.
(For clarity, the PSR is the Payments Systems Regulator and the FCA is the Financial Conduct Authority. The PSR ensures payments systems are working effectively. The FCA has responsibility under the IFR on matters such as interchange. The FCA is the financial regulatory body in the UK which enforces regulatory compliance.)
They were limited on what they could say, specifically regarding their plans to address Visa and Mastercard interchange. However, PSR and FCA want to hear about the adverse impacts the updated interchange rates will have on merchants and consumers from our members. FCA in particular, feels the UK is treated like a 3rd country since leaving the EU and their concern is British consumers and retailers will be adversely affected by such changes. Given the strong collaborative merchant voice we have, it would be useful to respond on topics such as interchange.
Next Steps:
1.) If you wish to connect with PSR and/or FCA directly or want to provide us with information that we can anonymize,please reach out to una@merchantriskcouncil.org and she will introduce you or share the information.
2.) PSR recently published their Annual Plan, which covers competition in the retail market. They intend to launch a public consultation in the next two months seeking input for their 5-year strategy plan.
For more details on the topic:
Visa: https://www.finextra.com/newsarticle/37706/visa-hikes-uk-eu-online-interchange-fees-faces-us-investigation-into-debit-card-practices
Mastercard: https://www.finextra.com/newsarticle/37335/mastercard-hikes-interchange-fees-for-uk-online-purchases-from-the-eu
• UK SCA Enforcement Deadline Extended to March 14, 2022
Last week, the Financial Conduct Authority (FCA) in the UK announced it has delayed the Secure Customer Authentication (SCA) enforcement deadline to 14th March 2022.
The regulation, originally scheduled to be implemented in September 2019, had its deadline moved by the European Banking Authority (EBA) to 31st December 2021. While the UK was focused on Brexit, the target date was further moved by the UK financial authority to 14th September 2021. The new extension comes to ensure there is enough time for merchants and consumers to adapt to and adhere to the new guidelines. To read the full release from FCA, please click here: https://www.fca.org.uk/news/statements/deadline-extension-strong-customer-authentication
The MRC has advised the national financial regulators across Europe of the challenges faced by our members and the payments industry when endeavoring to comply with the regulation. While this move is helpful, we hope that other countries take note and consider extending their enforcement deadlines as well.
We are working diligently to bring merchants and card issuers together to collaboratively work on the challenges. Last year, MRC established a Merchant-Issuer Executive Committee and a Slack channel where merchants and issuers connect in real time to de-bug issues experienced when SCA-compliant transactions are processed but fail. This important portal allows large and small brand industry players alike to share issues, solutions and best practices to help make the EU-wide card payments landscape a robust and working one for merchants and consumers.
Next Steps:
1.) If you are a merchant or issuer and wish to join the MRC Slack channel or the Merchant–Issuer Executive Committee, please contact una@merchantriskcouncil.org.
The MRC is proud to represent the Voice of the Merchant when engaging Regulators, as well as the card schemes and payments policy and standards bodies. We continue to work together with all those organizations to ensure that voice is well heard.
The MRC is in contact with global regulatory bodies and will continue to bring you the latest developments as soon as we have them. Please look at our Advocacy page on the website to explore our work or other topics.
