FTC Looks Into Possible Durbin Amendment Violations by Visa

NEW YORK -- Bloomberg News reported today that Visa Inc. has agreed to provide documents to the U.S. Federal Trade Commission (FTC) related to a debit card service that may have violated the Durbin amendment.

Antitrust regulators on Sept. 21 asked Visa to voluntarily provide documents on its PIN Debit Gateway Service. According to a company filing, Visa is cooperating and responding to government requests for information, and stated the revenue in question is not material.

The Gateway Service is optional and provided by Visa "to merchant acquirers that want to route transactions to other networks, but do not have connections to those networks," said a New York-based analyst at Barclays plc. "We suspect that the FTC's focus is driven by the recent regulations" and increased use of the service "given there are now greater PIN debit routing options," wrote Barclays analyst Darren Peller.

Visa also faces several other lawsuits and document requests, according to the Bloomberg report. In May, the company was subject to a U.S. antitrust probe of its pricing for debit card transactions and continues to provide information to the government for that investigation.

The Durbin amendment, named after U.S. Sen. Richard Durbin (D-Ill.), is a provision of the Dodd-Frank Act that limits the amount of swipe fees, or interchange, that Visa, MasterCard and other card companies can charge on debit-card transaction. The amendment was widely hailed as a victory for merchants and consumers at the time, although final rules by the Federal Reserve somewhat watered down the amendment.

In addition, earlier this year, Visa, MasterCard and the banks reached a proposed $6.6-billion settlement with merchants over credit card transaction fees after seven years of litigation. However, several retailers and retail trade associations, including NACS, have opposed the settlement.