Kansas City Fed Chief promotes ACH Debit

An article on Digital Transaction News shows that the concept of Alternative to Card Association Debit is needed. With the recent changes in the Credit Card laws by President Obama and Congress. Those who in the past benefited from paying their balances on Time. Are now going to lose out to those who are not. This may drive many back to Checks, and Cash. Certainly with Rewards programs being reduced, and the perks being eliminated. Change is in the wind. It is time to evaluate how an alternative system might benefit, Merchants and Consumers.

Kansas City Fed Chief Espouses ACH for Debit Card Processing

(May 27, 2009) The Federal Reserve Banks should adapt the automated clearing house network to compete directly with private-sector networks for debit card processing, the head of the Federal Reserve Bank of Kansas City said this week. “The Federal Reserve could enhance competition in payment card markets by positioning ACH services as an alternative to debit card payment networks,” said Thomas R. Hoenig, president of the Kansas City Fed, in remarks delivered on Monday at a retail-banking conference held by the European Central Bank in Frankfurt, Germany.

Hoenig said he isn’t proposing the Fed issue cards or run its own card network. But he said the U.S. national banking regulator could “add enhancements” to the ACH that would allow the nearly ubiquitous network, which reaches virtually every bank in the U.S., “to become an alternative to running transactions over card networks.” He pointed to decoupled debit cards, in which banks issue debit cards that link to deposits held at other banks, as an example of the sort of adaptation he favors.

For the full article click link. Digital Transaction News is a great source for information on the payments Industry.

http://www.digitaltransactions.net/newsstory.cfm?newsid=2222