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New regulations may be on the horizon for electronic payments

Feb 11, 2014 Dave King

Over the last several years, the use of electronic payments has been on the rise. In recent decades, debit and credit card usage has spiked, but a number of new technologies and security challenges have made the electronic payment market more complex.

For this reason, many industry leaders and organizations have called for new regulations to be put in place in order to create a better payment environment for consumers.

Concerns regarding the security of payment technology have grown in recent months, highlighted by several high-profile data breach events that compromised the information of millions of American consumers. Retail giant Target was perhaps the most publicized case, with WCCO-TV noting that more than 100 million Target shoppers may have had credit card numbers stolen.

EPC calls for collaboration
This large-scale breach raised alarms with many North American payment outlets, including the Electronic Payments Coalition (EPC). In a statement, the organization called for a joint effort by retailers, payment processing outlets, financial institutions and other groups to combat cyberthreats associated with electronic transactions.

"Data security is a rapidly changing and complex issue, and solutions require dedicated collaboration," the EPC statement noted. "All parties - retailers, networks, processors, financial institutions and others - must come together to implement solutions such as EMV and tokenization to strengthen the system and avoid future breaches."

While EMV chip technology is used in a number of other markets - Europe in particular - North America has yet to adopt the system that many foreign payment experts have credited for reducing fraud and data breach instances.

Whether or not this technology will be used by North American credit card and electronic payment processes has yet to be seen. However, as the EPC and other organizations start to call for regulatory reform for e-transactions, it's likely that EMV will be considered as an alternative to current security solutions.

ACH rules may change
Changes in ACH payments may also be coming, as InsideARM recently reported that the Federal Trade Commission backed a proposal from The Electronic Payments Association (NACHA) to step up monitoring for debit payments made via ACH. In particular, both groups want to strengthen risk management oversights to limit the number of returned ACH debits.

The source indicated that FTC and NACHA staff members believe improved regulatory policies could help limit cases of consumer fraud related to ACH. Potentially, it will make ACH payments an even more attractive transaction portal for modern buyers.