Visa Faces FTC Investigation, Merchant Pressure over EMV Debit Routing
Visa this week disclosed that the FTC “is conducting an investigation into whether Visa’s requirements for EMV chip processing inhibit merchant routing choice for debit card transactions. Visa is cooperating with” the FTC, the payments network said.
The controversy stems from the Dodd-Frank Act’s Durbin Amendment and concerns the point-of-sale messaging that prompts a consumer to choose between the debit network owned by the card brand appearing on the face of the card or a broad second category such as “US Debit” or “Other Debit.” An FAQ from the Board of Governors of the Federal Reserve System earlier in November clarified that such a requirement by a payment network violates Regulation II’s network and routing requirements because it prevents a merchant from directing the route of a transaction and instead prompts the consumer to make that choice.
Merchants have said Visa strives to send those consumers to the payment card network through the use of confusing messages.
The letter from the retail associations, released Nov. 16 and addressed to Visa leadership, said that the Federal Reserve’s recent clarification “calls into question the continued legality of a host of Visa’s rules and practices that compelled merchants to install and configure terminals that presented cardholders with a routing option that was limited to Visa and would eliminate merchant control of routing.”
Signed by the Retail Industry Leaders Association, Food Marketing Institute, Merchant Advisory Group, National Association of College Stores, National Association of Convenience Stores, National Grocers Association, National Retail Federation and the Petroleum Marketers Association of America, the letter urges Visa to “to present a clear and speedy process for resolving this issue that ensures merchants face no additional costs while they remove these non-compliant, confusing customer checkout screens,” along with following the Federal Reserve guidelines.
Visa offered no immediate comment.
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