MasterCard announced some changes to their interchange pricing today that will be effective October 3, 2008.
As some quick context if you are new to this. Here is an oversimplification: merchants pay fees to accept credit cards. Financial institutions that issue credit and debit cards make roughly 75% of the fees that merchants pay (merchant account providers charge the other 25% of the fees). When MasterCard makes changes to 'Interchange', they are adjusting the wholesale pricing of the fees that make up MasterCard and their financial issuing institution's 75% of fees. To the casual observer in this industry - these updates below won't make a lot of sense without some additional context.
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Where do credit card fees come from?
Computer World reports the following today:
For the second time in 12 months, California Gov. Arnold Schwarzenegger has vetoed proposed legislation that would have required retailers and other businesses operating in the state to take specific steps to prevent credit and debit card data from being compromised.
The latest version of the bill — known as the Consumer Data Protection Act, or AB 1656 (download PDF) — would also have required retailers that accept payment card transactions to disclose more details about any data breaches to the individuals affected by them. The bill was approved by the California State Assembly on a 74-1 vote last month, a week after the state Senate passed it by a 34-3 margin.
But in a veto message that he sent to state legislators on Tuesday (download PDF), Schwarzenegger said he was refusing to sign the bill for the same reasons he turned down the original version of the measure last October. "As I stated in last year's veto of a similar bill, this bill attempts to legislate in an area where the marketplace has already assigned responsibilities and liabilities that provide for the protection of consumers," Schwarzenegger wrote.
The governor said that requiring companies to notify consumers about breaches, even when there is no evidence of any personal data actually being stolen, would result in "significant costs" for businesses and the state government. In addition, he said, the controls mandated in AB 1656 would lock companies into current credit card data security best practices, creating a disincentive for them to adopt new and more comprehensive industry standards and ensuring that the law would remain "static in the face of future, unseen concerns."
Seems like practical, good decision making to me. Nice work Schwarzenegger.
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