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Thursday, October 18, 2012

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Home > Consumer Credit & Payments > Payment Cards Center

Payment Cards Center

The Payment Cards Center provides meaningful insights into developments in consumer credit and payments that are of interest not only to the Federal Reserve but also to the industry, other businesses, academia, policymakers, and the public at large. The center carries out its work through an agenda of research and analysis as well as forums and conferences that encourage dialogue incorporating industry, academic, and public-sector perspectives.

For information on all research on consumer credit and payments, go to our Program in Consumer Credit & Payments page.

What's new

October 2012

Discussion Paper Released: The Efficiency and Integrity of Payment Card Systems: Industry Views on the Risks Posed by Data Breaches
(720 KB, 35 pages)

The authors informally interviewed a number of market participants and several experts to better understand the risks presented by data breaches, the efforts to protect payment card systems against data breaches, and areas where more might be done to secure these systems. In particular, the authors investigated whether existing levels of investment, coordination, information sharing, and management of incentives in securing payment card systems by firms and organizations in the private and public sectors are adequate to confront the threats arising from modern data breaches. The lessons learned from these conversations are described in this paper.

September 2012

Discussion Paper Released: Do We Still Need the Equal Credit Opportunity Act?
(525 KB, 43 pages)

The Equal Credit Opportunity Act (ECOA) prohibits discrimination in any aspect of a credit transaction based on sex, marital status, race, ethnicity, age, or other specified factors. Regulation B implementing the ECOA, as applied by the courts, requires that financial institutions challenged on the basis that a policy or practice has a disparate impact on a protected class must demonstrate that such a policy or practice is related to creditworthiness and is justified by a legitimate and necessary business objective. Certain factors that lenders may use in their decisions regarding creditworthiness may be affected by discrimination that occurs in other markets, such as the labor and housing markets. The business necessity test allows financial institutions to distinguish between two categories of credit factors influenced by illegal discrimination in other markets: a) credit factors that have a disparate impact but demonstrably affect risk (so long as a less discriminatory approach would not satisfy the same business objective), and b) credit factors that have a disparate impact but where there is no countervailing legitimate business objective, or a less discriminatory factor would achieve the same business goal. This paper discusses the role of the ECOA and Regulation B in distinguishing between the two categories of credit-related policies and argues that the ECOA continues to be relevant so long as discrimination persists in markets affecting credit qualifications.

August 2012

Discussion Paper Released: Consumers’ Use of Prepaid Cards: A Transaction-Based Analysis

The Payment Cards Center of the Federal Reserve Bank of Philadelphia and the Center for Financial Services Innovation conducted this research project using transaction-level data provided by Meta Payment Systems in an effort to develop a better understanding of how consumers use prepaid cards by examining their transaction behavior and the issuer revenue and cardholder costs generated by those transactions.

July 2012

Conference Summary Released: Government Use of the Payment Card System: Issuance, Acceptance, and Regulation

The U.S. General Services Administration’s SmartPay program is the world’s largest commercial card portfolio. Nearly every state uses payment cards to electronically distribute unemployment insurance, child support, Temporary Assistance to Needy Families, or other funds. Federal, state, and local governments, as well as universities and other public-sector organizations, accept payments made with debit, credit, and prepaid cards. Recognizing the significant use of the payment card system by state and federal agencies, the Payment Cards Center hosted a conference on July 11 and 12, 2011 to explore the reasons why the public sector has adopted payment card options, the benefits that have resulted, and the challenges that must be managed.

June 2012

ATM & Debit Card Safety Awareness Month

June is ATM & Debit Card Safety Awareness Month. In honor of this, we recommend viewing three pamphlets produced by the Payment Cards Center: What You Need to Know About Payment Cards (203 KB, 12 pages), Preventing Payment Card Fraud: Dos and Don'ts (167 KB, 8 pages), and Protecting Yourself Against Identity Theft. (493 KB, 8 pages) You can access these and other valuable publications from the Consumer Resources section.

• Last update: October 11, 2012