Linking Debit Interchange and Terrorism – Really?

by Mercator Advisory Group 0

An interesting new viewpoint on the debit interchange debate has surfaced recently which attempts to use security threats as an argument against regulating issuer fees. Pushing this argument to the limit, this recent article dissects the strategy and some of the main proponents of this theory.

“The crux of this PR campaign came with stories like this one from the Washington Post: “The Federal Reserve has proposed capping … interchange or “swipe fees,” depending on which side you’re on — at 7 to 12 cents per transaction. That would reduce banks’ revenue from the fees by about 75 percent … On Wednesday, the card industry said a massive cybersecurity data breach could … be the result.”

Suggesting that financial institutions will no longer invest in cardholder security seems anti-intuitive, at the least. Pushing this argument to the other limit, if that is the case, than the message to consumers is that their money isn’t safe in U.S. banks. Regardless of the spokespersons involved in this discussion, that’s not the message the industry should communicate.

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