WASHINGTON – On November 3, the Federal Reserve helped ensure that its rules implementing debit reform protect the competitive marketplaces by issuing a clarification in its “Frequently Asked Questions,” which was previously reported in NACS Daily. Now, Visa has disclosed in its annual 10-K filing with the Securities and Exchange Commission that the Federal Trade Commission (FTC) has launched an investigation of its practices to see whether the card company has violated the Fed’s regulation. 

Referencing the FTC’s Bureau of Competition, Visa’s 10-K says, “Notice Regarding EMV Chip Debit Cards. On July 28, 2016, the Bureau notified Visa that the Bureau is conducting an investigation into whether Visa's requirements for EMV chip inhibit merchant routing choice for debit card transactions. Visa is cooperating with the Bureau.”

Last week, NACS and a group of associations representing retailers wrote to Visa insisting that it change its practices to comply with the law. The letter made clear that ensuring merchants have competitive choices among debit networks is a key part of a free market for debit transactions. And, the letter called on Visa to make up for its violations of the law, saying:

“Now that the Federal Reserve has made clear that Visa’s network rules are a violation of the law, we request information on your immediate plans to address the following:

• Make EMV smart card technology open and competitive instead of segregating your network on a chip application that is separate from that of all domestic debit networks (other than MasterCard) in order to gain a market advantage.
• Rescind any rule that leads terminal manufacturers to ship devices that include a prompt that can be routed only to Visa.
• Rescind any rules that require merchants to give up their uninhibited ability to select the debit network of their choice that is active on the card being used.
• Suspend the EMV liability shift while merchants reconfigure point of sale terminals to comply with federal law.
• Ensure merchants are aware of their rights regarding EMV deployment and routing service choice.
• Ensure hardware and software providers are aware that any network-required checkout screen that requires a selection that can only be routed to Visa is against the law.
• Ensure merchants who deployed EMV while the rules that violate Regulation II were in place are able to remove them without fear of EMV chargeback liability while the technology update takes place.
• Make changes to your network operating rules and EMV transaction acceptance guide to ensure merchants are not fined for their EMV deployment decisions.
• Ensure issuers are prioritizing only the technologies on the EMV card that have multiple routing options available for every transaction.
• Ensure innovation is not stifled by, and consumers are not harmed by, the practices your companies have employed to date during the EMV transition.”

NACS looks forward to Visa doing the right thing and making up for its mistake.