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By Kevin Woodward
@DTPaymentNews
The impact of a Donald J. Trump presidency on the payments industry may not be known in concrete terms yet, but speculation suggests a fair number of moves meant to take some of the sting out of regulations. Republican Trump handily won the Electoral College vote Tuesday, 276 to 216, in the election pitting him against Democratic Party candidate Hillary Clinton.
Among the possible actions mentioned by industry figures: curtailing the Consumer Financial Protection Bureau, altering the Dodd-Frank Act, hiking interest rates, reducing corporate tax rates, and even firing Richard Cordray, director of the CFPB.
A defanged CFPB is one possibility, suggests consultant Eric Grover, principal of Minden, Nev.-based Intrepid Ventures. “While Trump doesn’t necessarily have a coherent view of the administrative state, he’s decried the impact of excessive regulation and talked about repealing Dodd-Frank,” Grover says. “Trump’s presidency makes it likely Jeb Hensarling’s Financial Choice Act, or something close to it, has a chance of becoming law.”
The Financial Choice Act, proffered by U.S. Rep. Hensarling, R-Texas, would alter the Dodd-Frank Act and repeal that law’s Durbin Amendment, which set a cap on debit card interchange rates and established network-routing choice.
Grover also predicts that Cordray will be dismissed. “Symbolically, that would be a nice move,” Grover says. But he doubts the agency itself will be dismantled. “The chance of real CFPB reform went from zero to 50%. It’s going to be a tough slog, but I think now it’s possible.”
Others, aren’t so sure such change will occur.
There’s little evidence so far that Trump has any particular convictions (or comprehension) when it comes to the state of payments and financial services—other than a blanket rejection of regulation overall, consultant Steve Mott of Stamford, Conn.-based BetterBuyDesign, says by email.
“It is also unlikely at this point that tumultuous change by a Republican administration in CFPB, Dodd-Frank, Durbin, etc. will be possible, as the dysfunctionality in Washington would appear to be accentuated, not relieved, at this point,” Mott says. “So I’m guessing that what passes for the Republican ‘Party’ will tread carefully over the next two years, avoiding what happened to the Obama administration in 2010 after shoving its agenda down the country’s throats (mainly health care) in its first two years.”
One area where Trump could see some success, in Mott’s view, is on cybersecurity. An agenda that improves financial security could “actually earn bipartisan support,” he says. “Cybersecurity is one of the only unifying influences in the political/economic landscape right now, and fixing it would be a huge win for any administration—including Trump’s!”
Others predict changes to interest rates as set by the Federal Reserve. “Trump has clearly stated that he believes that interest rates are being held at an artificially low rate, so expect to see a rate hike early in his term,” Julie Conroy, research director for retail banking and payments at Aite Group, a Boston-based payments consultancy, says in a note released by Aite after the election.
Lower corporate taxes also could happen, says Nancy Atkinson, senior analyst of wholesale banking and payments at Aite. “Trump doesn’t think companies should be taxed at all, so if he is able to move his agenda forward, wholesale banking clients could find themselves with more cash,” Atkinson says in the Aite note. “On the other hand, Trump doesn’t want wholesale banking clients to outsource processing to other countries, so that ‘extra’ cash will need to be spent on American employees. Most likely, the products and services provided by wholesale banking clients will be more expensive than comparable offerings from other parts of the world; sales may be dependent on selling to other American companies, especially if tariffs and other hurdles are created for importing goods and services.”
For its part, the Electronic Transactions Association, a Washington, D.C.-based trade group for the acquiring industry, says it will work with Trump’s administration “to promote policies that advance, safe, secure, reliance and payments technology by the great companies that make up the ETA,” says Jason Oxman, ETA chief executive, in a statement. “The payments industry is heavily regulated by myriad federal agencies, and so ETA is looking forward to working with the Trump administration to reduce regulatory burdens and rein in overreaching regulation that stifles innovation and growth,” Oxman says.
