AGAMagazineIssue1_InsidePages.indd

INSIDE THE BELTWAY

N e x t S t e p s f o r S e c u r e S u p e rma r k e t Payme n t s

JENNIFER HATCHER SENIOR VICE PRESIDENT GOVERNMENT AND PUBLIC AFFAIRS FOOD MARKETING INSTITUTE

also foster innovation and ensure that all stakeholders have access to and utilize the most secure authentication forms available. Security Standards Credit card security standards are centrally set by the card brand controlled entities PCI and EMV Co. Both entities are closed, and no retailer has a vote on the board to set the standards for payment cards. These entities establish security standards retailers and other stakeholders must accept. All too often these standards are based on business decisions, not true security enhancements without retailer input resulting in stifled innovation and a lack of transparency in the electronic payments market. By establishing an open and fair security standards setting body, all stakeholders will have an opportunity to affect policy and decisions based on what is best for the system, not one business interest over another. Secure Routing In 2010, Congress recognized the dangers of relying on only one or two networks to transmit all debit transactions. The 2010 debit reforms required every debit card issued in the United States have at least two unaffiliated networks enabled on the card. This requirement has been incredibly successful by providing retailers and their

This month, grocers from throughout the country will be in washington D.C. as we seek for solutions to our industry's most pressing issues.

FMI, along with several of our retail association partners, have turned the focus to explain and advocate for three market- based solutions to start addressing the systemic weakness of the U.S. payment card system, while bringing transparency and greater security. Customer Authentication In March, all major card brands lifted their requirement for retailers to collect a signature for any transactions. Retailers cheered this change and welcomed the card brands’ acknowledgment that a signature provides no additional authentication. What is next? Our industry advocating for stronger user authentication. In today’s market that would include changing the card brand rules to allow retailers to require a customer to enter a personal identification number (PIN) to complete either a debit or credit transaction. PINs are proven to reduce fraud, and retailers would like to be able to require PIN, or other authentication methods that are ubiquitous and adopted for ATMs, on both debit and credit card transactions. While PINs are widely used today, policy should

Grocery retailers from across the nation will be attending our annual lobbying event. In addition to SNAP and the many issues facing supermarket retailers, we will talk about the next steps for payments. Last month marked my 20th year at the Food Marketing Institute and our work with payment systems. In 1998, only a portion of our country had moved to EBT, with the remaining states still collecting paper coupons. The EBT system was not yet national but was governed by regional coalitions of states. Checks were the most popular payment with more than 45 percent of the payments by value. There were no rewards on credit or debit; on-line debit fees were a maximum of 13 cents and while credit card interchange was annoying at 1.15 percent, it was still only 11 percent of sales. How much has changed in the last 20 years. Yet, in many payment areas, the U.S. is lagging behind the rest of the world, including in both security and innovation. In 2016, while the nation accounted for 23.9 percent of credit and debit card volume, it shouldered 39.5 percent of global card fraud.

| ALABAMA GROCER 18