Friday, August 30, 2013
The U.S. Department of Health and Human Services (HHS) issued a ruling that requires healthcare insurance providers accept prepaid debit cards as payment for policies under the Affordable Care Act (ACA), or Obamacare. The sweeping healthcare reform law previously required payments be made only from demand deposit accounts. The ruling will reportedly allow approximately 10 million uninsured consumers who are also unbanked or underbanked to purchase government-run medical insurance plans with general-purpose reloadable (GPR) prepaid cards.
In October 2013, state healthcare exchanges are expected to open, allowing consumers to choose plans. Consumer advocates, financial services providers and academia were concerned that unbanked individuals, often from low-income minority communities, could have faced fines for not purchasing health insurance because they did not have access to checking accounts.
A June 3, 2013, post on the blog of Vanderbilt University noted that up to a quarter of people eligible for subsidized ACA insurance may be "shut out" from the program for lack of bank accounts.
The blog quoted John Graves, Ph.D., assistant professor of Preventive Medicine at Vanderbilt: "It turns out there are regulatory blind spots in the legislation that addresses how people would pay for their insurance. We found that insurers may require people to pay out of their checking accounts. There is no explicit language to require other forms of payment within the law.
Graves, who co-authored a May 2013 report on the subject with healthcare reform experts from tax advisory service Jackson Hewitt Inc., said that the "easy fix" was for HHS to add GPR cards as a payment option. Presently, the exchanges are not required to accept traditional credit or debit cards.
China's largest third-party payment platform Alipay, a unit of Alibaba Group, revealed on Aug. 28, 2013, that the company will terminate its offline POS service for small businesses. The news came amidst growing speculation that state-owned, domestic bank card organization China UnionPay had applied pressure on Alipay to route service through its system.
Reuters reported the World Trade Organization in 2012 ruled that "China had unfairly discriminated on behalf of UnionPay at the expense of foreign competitors," in particular MasterCard Worldwide and Visa Inc., drawing accusations of monopolistic behavior. In 2012, Alipay, Tenpay and UnionPay dominated the Chinese third-party payments market with 46.6 percent, 20.9 percent and 11.9 percent shares, respectively, according to Analysys International.
The U.S. ATM industry is concerned that the U.S. District Court's recent ruling against the Federal Reserve's actions to regulate debit card interchange will further delay implementation of the Europay/MasterCard/Visa (EMV) chip card standard in the United States. ATM network operator Kahuna ATM Solutions said that the way the Fed implemented the Durbin Amendment to Dodd-Frank Act of 2010 already has slowed U.S. adoption of EMV, and the recent ruling only slows the process further.
"It is widely acknowledged that Durbin has contributed to the delayed development of a common U.S. AID [Application Identification] for EMV which puts ATM operators of all sizes in an untenable position to meet liability shifts with networks," said Bryan Bauer, President of Kahuna. "Implementation of Durbin was also 'not positive' for the ATM industry because the Federal Reserve failed to put in place the two unaffiliated bugs for PIN debit and two for signature debit in the first place."
The Durbin Amendment mandates that the financial services industry reconfigure its infrastructure so that every debit card transaction can be processed over one of two competing debit networks. The industry has been slow to make the necessary changes by adopting a common AID protocol. With the district court ruling that the Fed misinterpreted the Durbin Amendment in the first place, the transition to EMV is further delayed.
"Should the court ruling withstand appeal, it would appear to require adoption of new rules by the Fed mandating two unaffiliated bugs for PIN debit," said Bruce Renard, Executive Director of the National ATM Council Inc.
The Electronic Transactions Association and The Strawhecker Group jointly released the second quarter 2013 U.S. Economic Indicators Report, and once again the payments industry continued to outperform traditional market sectors. ETA CEO Jason Oxman said, "The U.S. economy continues to recover and trends in the electronic payments industry continue to look positive." According to the report, the disintermediation threat posed by new entrants "appears to be limited to the smaller, non-specialized merchant market," and price compression remained minimal.
Additionally, the ETA is now accepting applications from payment professionals interested in taking the Certified Payments Professional examination during the next scheduled testing period, Nov. 1 to 30, 2013. ETA said the computer-based examination will be administered through a network of over 375 testing centers located in the United States and Canada. Online applications are available at www.electran.org/cpp . Deadline for applications is Oct. 1.
Editor's Note:
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