Durbin, Welch Statement on Federal Reserve's New Rule to Ensure Debit Card Competition
Announcement comes after Members called on Fed to investigate reports that card-issuing banks are failing to enable at least two debit card network options for online sales
WASHINGTON — U.S. Senate Majority Whip Dick Durbin (D-IL) and U.S. Congressman Peter Welch (D-VT) released the following statement after the Federal Reserve finalized updates to the Board's rule concerning debit card transactions:
“For years we have worked to bring fairness and competition to debit and credit card swipe fees, and this is a big step forward. The Federal Reserve’s rulemaking is a win for competition and good news for Main Street merchants and consumers who are tired of big banks and giant card networks trying to rig the game. Encouraging competition between debit card networks for online transactions helps keep swipe fees down and incentivizes the networks to improve their fraud-prevention capabilities, as the Fed recognized in its announcement. We need real competition in both debit and credit cards so we can create a better and fairer payments system.”
The updates specify that debit card issuers should enable at least two payment card networks to process all debit card transactions, including "card-not-present" transactions, such as online payments.
Durbin and Welch previously sent a letter to Federal Reserve Chairman Jerome Powell expressing concern over troubling debit card industry practices that are diminishing competition and costing American merchants potentially billions in excessive swipe fees. Under current law, enacted as part of the 2010 “Durbin Amendment,” banks that issue debit cards must enable at least two unaffiliated debit networks to be available for each debit card transaction so merchants can have a choice of competitive options. This requirement enables lower-cost debit networks to compete for business with the dominant Visa and Mastercard duopoly. However, as Americans are increasingly making online card payments during the COVID-19 pandemic, Durbin and Welch urged the Fed to investigate reports that card-issuing banks are failing to enable their debit cards to be used by at least two debit card networks for online transactions.
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