MAG Insights

A Look Back at 2020

In election years, the opportunity to move legislation is limited; add a presidential election into the mix and the timeline “to get something done” is even more compressed. This year was a year unlike any other, though – not only did we have a presidential election, but we also had a pandemic.  What a combination!

Looking back at the last nine months, it seems crazy to think about how much the world has changed, which includes a customer’s experience with retailers and merchants.  We have witnessed an unbelievably rapid increase in transactions over digital channels, thanks in large part to COVID-19.  This change to e-commerce, mobile commerce, buy online pick up in-store (BOPIS) and other “touchless” solutions (LINK to social media graphic) exacerbates a problem merchants have raised for years: the inability to have routing choice for online debit transactions.  Unfortunately, the pandemic has helped merchants illustrate their point even more clearly: the technology exists to allow merchants routing choice for online debit transactions. 

When the ball dropped in 2019 and 2020 began, we thought we may see debit routing enforcement actions by the Federal Trade Commission (FTC) this year.  But as 2020 comes to a close, with Card Not Present (CNP) volume at an all-time high, merchants are still waiting to fully realize their debit routing rights.  Now is the time for issuers and networks to work together to enable alternative networks on debit products.  If they do not offer these solutions, the FTC and Federal Reserve (Fed) have the authority, through the Dodd-Frank Wall Street Reform and Consumer Protection Act, to enforce against violations.

What happens next?

In January, things will change in Washington.  The most obvious and noteworthy change is that President-elect Biden will be inaugurated as the 46^th President of the United States.  Although President Trump is seeking another recount in Georgia and has not acknowledged the upcoming transition, the President-elect has started to hire White House aides while many DC insiders speculate about possible Cabinet and other key appointments.  It often takes months for staffing to shake out following an inauguration as many people move around from Capitol Hill to the White House and agencies following Senate confirmations of key officials.

There will undoubtedly be change at the Fed and FTC, among other key agencies that play a role in payments and financial service policy in 2021, and merchants continuing the educational and advocacy efforts will be critical in Reg II enforcement. 

As that process plays out on Pennsylvania Avenue, up on Capitol Hill the Democrats will retain the majority in the House of Representatives for the new Congress, although with a much narrower margin than they have in this current Congressional session.  Meanwhile, in the Senate, two races in Georgia are unresolved, and the runoffs are scheduled for January 5, 2021.  The current breakdown is 50 Republicans, 46 Democrats and two Independents who caucus with Democrats, so if even one Republican holds his or her seat, they will retain the majority with a slim margin.  If both Democrats win the runoffs, the majority shifts to the Senate Democrats with Vice President-elect Harris holding the ability to cast tie-breaking votes.

With both chambers having slim majority margins, the Committee ratios will be close, meaning that in the House there won’t be many more Democrats than Republicans serving on Committees.  The narrow margins, both on Committees and in the full chambers, invariably makes it harder to push legislation through the process. 

This environment means merchants should be strategic about initiatives and policies they plan to advocate for in the new Congress.  It will be important to build bipartisan coalitions that appeal to both sides of the aisle in order to get legislation passed and signed into law.  Education is a cornerstone of payments policy advocacy on the Hill and in the regulatory space, and 2021 will be no exception as new Members and staff get up to speed on the issues – while dealing with a pandemic, of course. 

It is typical that the Administration and Congress have a multitude of issues to consider before them; however, 2021 presents unique challenges as policymakers grapple with a pandemic and Presidential transition at the same time.  These external factors could mean it takes extra effort and a longer amount of time to see policy changes through advocacy and educational efforts, but merchants should not be deterred.  Effecting change takes time and building upon the groundwork they have laid for competition and transparency in the payments system will be well worth the effort.