Outspoken Merchant Advocate Mallory Duncan of the NRF To Retire

Mallory Duncan, senior vice president and general counsel of the National Retail Federation and one of the most outspoken advocates for merchants on payments issues, announced Thursday that he will retire at the end of August.

“Whether you’re appealing to the Supreme Court, testifying before Congress or meeting at the White House, Mallory is the lawyer you want by your side,” NRF president and chief executive Matthew Shay said in a statement. “There is no brighter legal mind in the retail industry, and nobody understands the complexities and nuances of the issues he follows better than he does. He has been indispensable to me as a trusted advisor, and I am sorry to see him go.”

A native of Los Angeles and graduate of Yale Law School, Duncan joined the Washington, D.C.-based trade group in 1994 as general counsel after serving as senior counsel at department-store chain J.C. Penney’s Washington office. Before that he was a senior attorney in the Office of Policy Planning at the Federal Trade Commission.

It was at J.C. Penney that Duncan first learned about credit card issues, but he got a full immersion once he arrived at the NRF. As credit and debit cards became increasingly popular with consumers in the 1990s, merchants began to complain about rising acceptance costs and network rules that, in their view, heavily favored issuers and the card brands.

“When I came here I realized retailer after retailer was screaming bloody murder” about their treatment by the brands, Duncan tells Digital Transactions News. Duncan concluded that the process of setting interchange—the transaction fees set by Visa Inc. and Mastercard Inc. that are paid by the merchant acquirer to the card issuer—represented a “failing market.” Acquirers invariably pass their interchange expenses on to merchants.

“The classic answer to a failing market is, are there one or two tweaks we could do to improve it,” he says. “The more we looked at it, the more we realized it was like an octopus, and you’re going to have to sever a few legs before you have a semblance of competition.”

Under Duncan, the NRF supported or directly participated in various merchant lawsuits against the card networks over interchange and network rules that limited merchants’ ability to steer customers to low-cost forms of payment. The NRF also was an enthusiastic supporter of the Durbin Amendment in the 2010 Dodd-Frank Act, which for the first time brought interchange price controls to the U.S. debit card industry as well as transaction-routing requirements intended to spur network competition.

But many retailers and the NRF were disappointed that the interchange cap set by the Federal Reserve Board in 2011, which Dodd-Frank charged with implementing the Durbin Amendment, was much higher than called for in the language of the law. The NRF took the Fed to court over the issue and prevailed at the district court level but lost at the appellate level. The case then went to the Supreme Court, which let the Fed’s rates stand.

Duncan hopes the Fed lowers its cap the next time it reviews the issue, as required by law, but he’s still happy that the Durbin Amendment is in force. “It’s not perfect, but it’s better than a cartel,” he says.

On the other hand, the NRF and retailers that challenged a $7.25 billion settlement by Visa, Mastercard, and some big banks over credit card interchange prevailed, and that case is now back in trial court for additional proceedings.

Duncan also is proud that the NRF educated members of Congress about the seemingly arcane but important issues related to payment card acceptance. Despite opposition from banks, Republicans in the House of Representatives recently decided to retain the Durbin Amendment in a major Dodd-Frank overhaul bill.

“Members recognize now … that the market is broken,” Duncan says.

The NRF already has begun search for Duncan’s replacement. Duncan says he plans to consult on payments and other issues in retirement.