Four industry leaders participating in the Electronic Transactions Association Strategic Leadership Forum's CEO round-table discussion, titled Is This a Revolution or an Evolution?, agreed ISOs that can master and adopt the best technology while broadening the scope of their services will hold their own against new tech companies entering the payments space. The forum was held in Chicago from Oct. 25 to 27, 2011. Round-table participants included Moneris Solutions Corp. President Greg Cohen; Adam Coyle, President of National Processing Co. Inc.; Roam Data Inc. Chief Executive Officer Will Graylin; and Chris Spinella, CEO of Apriva LLC.

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The Internal Revenue Service said it has listened to complaints about new reporting requirements for merchant card receipts. Thus it is postponing some elements of the rules newly required under Section 6050W of the Internal Revenue Code. In a pair of notices released Oct. 27, 2011, the IRS said it is delaying by one year the backup withholding requirements that kick-in when a covered business fails to provide a correct taxpayer identification number to an acquirer or network reporting annual card settlement payments via the new IRS Form 1099-K.

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While the prepaid card industry is under increased pressure from federal law enforcement to step up anti-money laundering (AML) efforts, a survey conducted by Dow Jones & Co.'s Risk & Compliance division and the Association of Certified Anti-Money Laundering Specialists found that businesses' compliance departments are struggling to fulfill their AML responsibilities due to a lack of training and resources.

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To recover revenue lost from the cap imposed on debit card interchange fees by the Durbin Amendment to the Wall Street Reform and Consumer Protection Act of 2010, several big banks have instituted new consumer fees. In response, a growing number of bank customers are reportedly moving their accounts to less expensive financial institutions, and federal and state legislators have proposed legislation to ban debit card fees.

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Visa Inc. and MasterCard Worldwide were recently hit by two new class action complaints alleging the companies fix ATM fees. These complaints came less than a week after the National ATM Council Inc. and more than a dozen independent ATM operators filed an anti-trust lawsuit on the same grounds. All three suits were filed in the U.S. District Court for the District of Columbia.

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When prepaid card businesses file paperwork to register as money services businesses by the Jan. 29, 2012, deadline, they will need to comply with new anti-money laundering (AML) regulations created by the Financial Crimes Enforcement Network (FinCEN). An analyst at the Atlanta Federal Reserve's Retail Payments Risk Forum detailed those compliance obligations, including what cards are subject to regulation and record collection responsibilities for prepaid card providers.

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The Payment Card Industry Security Standards Council (PCI SSC) updated the standard that mandates security requirements for PIN entry devices to incorporate devices that do not offer PIN entry. The PIN Transaction Security (PTS) Data Security Standard (DSS) was expanded to include guidance for determining whether non-PIN accepting devices meet the requirements of point-to-point encryption (P2PE) – the technology many security experts believe is the most secure way to protect personal information and other card transaction data.

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Part of Affiliated Computer Services Inc.'s integration of contactless payments for the New Jersey mass transit system is a rubberized wristband payment mechanism for transit riders with disabilities. The near field communication- (NFC) enabled wristbands will allow users to make proximity payments at terminals powered by MasterCard Worldwide's NFC technology, PayPass.

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As reported in "PayPal staking claim in mobile payments sphere," The Green Sheet, Oct. 10, 2011, issue 11:10:01, PayPal Inc., the international payment franchise owned by eBay Inc., has recently used acquisitions to foster innovation in its payments technology. Now PayPal is partnering with a number of companies to push payments into new frontiers. Russ Jones, a Partner at research and consulting firm Glenbrook Partners LLC, said in a recent blog post, "PayPal is … providing a rationale for merchants to adopt without the capital expense of redeploying terminals and providing consumers with an incentive to use PayPal as a payment option at [the] POS."

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The Financial Crimes Enforcement Network (FinCEN) is proposing that general purpose, reloadable (GPR) prepaid cards and certain kinds of gift cards be included on Currency and Monetary Instrument Reports (CMIRs) that are used to report the international transportation of funds at U.S. border crossings.

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Within weeks of the Oct. 1, 2011, implementation of the Durbin Amendment to the Wall Street Reform and Consumer Protection Act of 2010, a movement has begun in Washington to repeal it. Rep. Jason Chaffetz, R-Utah, and Rep. Bill Owens, D-N.Y., introduced HR 3156, the Consumer Debit Card Protection Act, a bipartisan effort to repeal the amendment. The bill was introduced Oct. 12, 2011, and referred to committee. The congressmen said the bill is an effort to "restore balance to the electronic payments system." "This is a perfect example of the dangers of price controls and the inefficiency of government intervention in the fee market," Chaffetz said. "The Durbin Amendment is an affront to consumers and the banking industry. These legislatively enacted price controls have compelled banks to charge consumers higher (and in some cases new) fees to make up for lost revenue."

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The newly formed National ATM Council Inc. filed a proposed class action lawsuit in the Federal District Court for the District of Columbia Oct. 12, 2011, against Visa Inc. and MasterCard Worldwide. The suit alleges the card companies' network rules prevent ATM owners from offering lower prices for transactions on PIN-debit networks not affiliated with either MasterCard or Visa. It also alleges the rules limit ATM operators' earnings and are a violation of the Sherman Act's prohibition of restraint of trade.

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On Oct. 7, 2011, the Queens, N.Y., District Attorney Richard Brown indicated a credit card fraud and identity theft investigation dubbed Operation Swiper yielded 111 arrests and 10 indictments in Queens County, N.Y. The thieves allegedly stole more than $13 million in their 16 months of operation and were reportedly members of five credit card forgery and identity theft rings operating in the United States, Europe, Asia, Africa and the Middle East. "This is by far the largest – and certainly among the most sophisticated – identity theft/credit card fraud cases that law enforcement has come across," Brown said.

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On Oct. 9, 2011, California Gov. Jerry Brown vetoed a state senate bill that would have mandated employers that offer employees prepaid payroll card programs to also provide employees free banking services. In vetoing SB 931, Brown said the bill would impose numerous and costly requirements on paycard providers and likely result in banks and employers eliminating the service, to the detriment of the workers the bill aimed to protect.

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Life under the Durbin Amendment to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act has begun, and some merchant segments are seeing substantial benefits. But not all card-accepting businesses are faring well; those with large volumes of small-ticket items are paying more to accept debit cards than they were before Oct. 1, 2011.

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The Financial Crimes Enforcement Network (FinCEN), tasked with bringing the prepaid card industry into compliance with updated mandates to the anti-money laundering provisions of the Bank Secrecy Act (BSA), wants to hold a town hall-style meeting in its Vienna, Va., offices with industry representatives.

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Visa Inc. and MasterCard Worldwide implemented new interchange rates Oct. 1, 2011. Though Visa quietly disclosed the rate changes in a bulletin sent to bankcard issuers and acquirers in August, the company refused to talk about its interchange rates with The Green Sheet. MasterCard and Discover also declined to talk about changes in their interchange rates. Visa set its debit interchange rates at the maximum allowed under the Durbin Amendment to the Wall Street Reform and Consumer Protection Act of 2010 for its Visa Check Card, Consumer Prepaid, Commercial Prepaid, Interlink PIN, Small Business Debit and Interregional Debit cards. Visa also made a number of modifications to its rates.

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Carla Balakgie, Chief Executive Officer of the Electronic Transactions Association, resigned to become CEO at the National Automatic Merchandising Association. Her legacy is populated by a long list of accomplishments that leaves the organization, and her successor, well situated to meet the challenges of the rapidly evolving payments industry. "When Carla joined the ETA we were run by volunteers," ETA President Richard (Rick) Pylant told The Green Sheet. "It was a daunting task to bring all that internally. Now we have a very strong operating entity that is self sufficient."

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At MasterCard Worldwide's annual Investment Community Meeting held Sept 15, 2011, in New York City and streamed online via webcast, an executive detailed the corporation's prepaid card strategy. Central to that strategy are general purpose reloadable, corporate and government benefits cards underpinned by financial inclusion initiatives underway globally, said Timothy Murphy, Chief Product Officer at MasterCard.

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Three data breach notification and data security bills approved by the Senate Judiciary Committee on Sept. 22, 2011, are scheduled for Senate debate. The Judiciary Committee approved S. 1535, the Personal Data Protection and Breach Accountability Act of 2011, authored by Sen. Richard Leahy, D-Vt.; S. 1408, the Data Breach Notification Act of 2011, offered by Sen. Dianne Feinstein, D-Calif.; and S. 1151, the Personal Data Privacy and Security Act of 2011, also offered by Leahy.

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Think tank and conference organizer American Conference Institute reported that the 5th Annual Forum on Prepaid Card Compliance will be held in Washington on Jan. 30 and 31, 2012. ACI, which bills the forum as the U.S. prepaid card industry's premier legal and compliance event, said the industry faces unprecedented legal and regulatory challenges at both the state and federal levels; it is therefore incumbent on stakeholders to ensure prepaid card programs are in compliance with the various statutes.

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