Fed: It’s Time for Big Banks to Play by the Rules
- By [ Austen Jensen ]
- Washington, DC
- 06/29/2023
“Today is the culmination of a long fight to ensure the vital debit reforms passed into law are being followed by Visa, MasterCard, and big banks in the payment ecosystem. The implementation and enforcement of the Federal Reserve Board’s final rule on debit card transactions for “card not present” transactions is a relief to retailers who have for years been harmed by Wall Street banks’ refusal to allow competitive routing.
“Though welcomed and strongly supported, the Board’s clarification should not have been necessary. The Durbin Amendment gave merchants the right to route debit transactions for all sales over a decade ago; yet the nation’s largest banks chose to protect the card network duopoly between Visa and Mastercard rather than follow the law. The resulting lack of competition in the payments market has ultimately cost consumers billions in hidden swipe fees.
“With the enforcement authority of the Board and other agencies in effect, banks such as Wells Fargo must finally adhere to the law. Today is a major step toward finally seeing long overdue competition in the payments market, but there is still work to be done. The Federal Reserve should also address the longstanding issues surrounding debit interchange costs for merchants under the Durbin Amendment, and we encourage Congress to build on these debit reforms and expand routing competition to credit card transactions, as well.”
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Tags
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Competition
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Payments
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Public Policy
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Finance
