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Visa Changes Rules to Avoid Enforcement Action by the Federal Trade Commission

Recent scrutiny by the FTC and Federal Reserve Board of Governors triggered the modification.
November 23, 2016

​SAN FRANCISCO – This week, Visa agreed to change their rules and requirements for payment system stakeholders regarding the rollout of EMV smart chip technology in the United States. The move comes after careful scrutiny from the Federal Trade Commission (FTC) and Federal Reserve Board of Governors under which it became apparent that Visa was violating current law that requires competition for debit network routing services.

Earlier this month, 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.

To avoid further enforcement action, Visa agreed to amend its rules that handcuffed merchants so that they could not choose the networks they wanted on debit transactions. The FTC announced it would halt the investigation due to these changes, while reserving its rights to revisit this violation in the future.

The FTC launched an investigation into Visa's market practices after several payment system stakeholders, including consumers, merchants and domestic debit networks, raised concerns regarding Visa's rules and requirements that restricted routing options within EMV. The FTC notes their investigation found that limited network availability on separate EMV applications inhibits merchant routing choice guaranteed by law.

Furthermore, a Visa Business News notice clarifies that merchants "can promote their preferred verification method, including by discouraging the use of signature" and can route transactions to any network regardless of whether or not a PIN is entered.