Over the summer of 2009, the Electronic Transactions Association provided information to help educate Washington officials on data security, interchange and tax regulation. The full Congress, which begins its legislative session in mid September, plans to review several proposed data security and breach notification bills.
According to Mary Bennett, ETA's Director of Government and Industry Relations, there has already been significant movement in the U.S. House of Representatives on H.R. 2221, the Data Accountability and Trust Act, introduced in April 2009. H.R. 2221, if passed into law, would require the Federal Trade Commission to promulgate regulations with regard to data security and breach notification and, more importantly, would preempt state information security laws.
"It seems that Congress is paying a greater level of attention to data security this year," Bennett said. "The Obama administration has created a new Cyber Security Office to develop national strategies to secure cyberspace and coordinate all security policies nationwide. And the FTC said they won't be shy about enforcing data security requirements."
The ETA believes that legislators need continuing education on the components and operations of electronic payment systems before any of the bills being considered are passed. The ETA's primary focus is lobbying Congress to create a national breach notification standard that supersedes the more than 40 different state laws pertaining to data security and breach notification.
The ETA's board of directors met in July 2009 to approve a government relations policy plan that actively supports the creation of a federal breach notification standard. Additionally, in order to achieve optimum results pertaining to any data security and breach notification bills, Bennett suggested that ETA members and all industry professionals pay close attention to their representatives in Washington.
"Payment professionals can be proactive by making themselves known to their elected officials," Bennett said. "Find out what committees they may be on that pertain to these bills and get to know them. Let them know respectfully that you are paying attention to the activity on Capital Hill as it relates to the payments industry.
"Establish a pre-existing relationship so that when a bill comes up on data security you have the opportunity to express your support for a national standard. Let them know that it will make a huge difference in your ability to do business. That congressman or senator needs to understand that their constituents have businesses in the area that can be helped and grown with implementation of a uniform standard," Bennett added.
On Aug. 5, 2009, representatives and members of the ETA spoke with IRS officials to discuss the merchant reporting regulations. On Aug. 13, another group of ETA members participated in a 90-minute conference call with officials from the U.S. Government Accountability Office to explain the interchange system.
In both meetings ETA members explained the different layers of the payments system, defined the types of third-party businesses engaged in payment processing, the nature of the fee structure and the reasons merchants pay those fees.
They also drew distinctions between the interchange and the discount rate, emphasizing that interchange is but one piece of what merchants pay for products and services. Additionally, ETA detailed the high level of competition in the discount market and reported that a small retailer has a greater ability to negotiate a favorable price for transaction processing than for any other utility required to run a business.
Carla Balakgie, Chief Executive Officer, ETA, stressed that the industry be given adequate lead time for implementation of the merchant tax reporting law, which will require processors and acquirers to report merchant credit and debit card transactions to the IRS beginning Dec. 31, 2010.
According to Balakgie, sufficient lead time is critical to ETA members because, once the regulations are finalized, new systems will need to be created and existing systems will need extensive reconfiguration.
"The ETA's role in educating federal agency staff is critical to the association's membership and others involved in electronic payments," Balakgie said. "Because our members represent every node in the payments chain, ETA is in a unique position to speak to the broad impact that could result from the studies conducted by the GAO or from the merchant reporting regulations to be issued by the IRS. It is vital these agencies involved have a clear picture of the payment system."
For more information or to become an ETA member, visit www.electran.org.
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