The Federal Trade Commission (FTC) has initiated a preliminary inquiry on Visa and Mastercard for possibly prohibiting merchants from using other debit networks, Bloomberg Law reports.
The regulator is looking into whether Visa, Mastercard and other large debit card issuers are blocking retailers from routing card transactions, some mobile wallet payments and tap-to-pay transactions over alternative networks such as Pulse, NYCE and Star, the report said. The FTC has been reaching out to large merchants and their trade groups over the issue, the report added.
A 2010 law known as the Durbin amendment – named for Senator Dick Durbin, an Illinois Democrat who ushered it into existence – limited the amount the largest US banks could collect for debit transactions and required that merchants have at least two options for routing them. When chip cards began arriving in the US roughly five years ago, they carried so-called application identifiers, or AIDs, which allow merchants to route debit transactions to their preferred network.
The inquiry could spell fresh regulatory trouble for the world’s two largest payments processors which settled a protracted European Union antitrust probe in April this year over card fees.
The regulator has probed issues related to debit routing in the past. Following an FTC inquiry in 2016, Visa revised a rule that required retailers to ask cardholders to choose a routing network for their debit card transactions.
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