Visa Adjusts Debit Routing Practices after FTC Investigation
Visa is changing its debit routing practices, following an investigation from the Federal Trade Commission and a ruling from the Federal Reserve. Visa was accused of steering consumers to their debit processing network, which is often more expensive for merchants than other debit card processors.
Under the previous system, merchants would have to display a screen for consumers to select “Visa Debit” or “U.S. Debit” for processing their transactions. The Visa option would route the transaction over a Visa-owned network which required the merchant to pay a higher fee. Consumers were only asked to provide a signature for the transaction, which could be forged. The U.S. option would process the transaction over the merchant’s network of choice, using a more secure PIN verification.
With the new system, Visa will no longer require merchants to display that screen. The National Retail Federation wrote a letter to Visa earlier this month, urging the company to provide better education and opportunities for merchants using EMV technology in their stores. They also asked that “consumers are not harmed by the practices your companies have employed to date during the EMV transition.” The NRF believes that steering consumers to process debit transactions on the Visa network will ultimately lead to higher product prices as retailers try to make up for the extra fees.