WASHINGTON—Not surprisingly, the National Retail Federation said it “welcomes” last week’s announcement by the FTC requiring Mastercard to share data that competing networks need in order to process online transactions made with Mastercard debit cards.
“The card industry has been trying to do end runs around the rules on debit card routing for far too long, driving up prices for consumers in the process,” NRF Vice President for Government Relations, Banking and Financial Services Leon Buck said in a statement. “This order goes hand in hand with the Federal Reserve making it clear this year that routing rules apply the same online as they do in-store. Congress said a dozen years ago that networks have to compete over debit card transactions, and this is another important step in making sure that finally happens. Nonetheless, we are carefully reviewing the order to ensure that it achieves its intended result of making the card industry play by the rules.”
The Allegations
As CUToday.info reported, the FTC is alleging that Mastercard has effectively blocked lower-cost networks like NYCE, Star and Shazam from being able to handle ecommerce debit card transactions by tokenizing data from the transactions and then refusing to detokenize the data for competitors.
FTC commissioners voted that the practice violates the Durbin Amendment, the 2010 law that said debit cards must be able to be processed over at least one unaffiliated network in addition to Visa or Mastercard. The FTC ordered Mastercard to make the data available in the future.
The commission cited Mastercard’s practices involving digital wallets, but the order applies to all ecommerce transactions, including both digital wallets and online purchases, as CUToday.info reported.
Consumers Paying More Than $30 Billion
In announcing its support for the FTC decision, it said the Durbin Amendment has saved retailers over $100 billion since it took effect in 2011, with about 70% of the savings passed on to consumers.
“But swipe fees banks and networks charge to process debit card purchases still cost merchants and their customers $32.6 billion last year, including $28.1 billion for transactions routed over the Visa and Mastercard networks,” the retailers said.
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