ARLINGTON, Va.–The Federal Reserve is giving new attention to payments-related issues, including, according to one analyst, reopening one divisive argument over what is going to involve powerful players who have been at this same table before.
As CUToday.info reported here, the Federal Reserve announced it plans to clarify what financial institution must pay retailers to decide where to route online debit card transactions for processing the same as they do with in-store debit transactions.
The announcement will bring two of Washington’s most powerful lobbies, financial institutions and retailers, back into the fray. The National Retail Federation has already announced it welcomes the Fed decision.
Andrew Morris, senior counsel for research and policy with NAFCU, said the trade group is “definitely watching” the new attention being given to payments by the Fed.
‘Narrow Review’
Its announcement related to interchange, said Morris, is “narrow,” as it applies only to routing practices, but it comes against a broader “backdrop” involving influential groups with strong opinions.
Referring to the Durbin Amendment of a decade ago, Morris observed, “Interchange was contentious when it was first introduced and now with the reopening of things we can expect all the same parties to be at the table with all the same arguments that were previously heard. The Fed is inviting re-litigation of issues we thought had been settled.”
Open to Fintechs?
But that isn’t the only payments-related bucket on which the Fed has pulled back the lid.
As CUToday.info reported here, the Fed has also issued a request for comment on a set of proposed guidelines the central bank will use when evaluating requests for accounts and payment services at Federal Reserve Banks.
Morris noted NAFCU is also closely monitoring the Fed’s activity in this area, as it really is about which “novel entities,” such as fintechs that may have a limited-purpose charter, have access to the payments infrastructure.
“NAFCU very active in advocating for a level playing field between credit unions, traditional financial institutions, banks and fintechs,” said Morris. “They certainly raise a lot of questions about what the nature of payment access should be. I think the Fed is issuing this request for comment in response to comments NAFCU and other financial sector trades have made. There isn’t necessarily a uniform and transparent set of standards for considering how these entities will be evaluated when they do apply.”