According to The Wall Street Journal, representatives of large retailers, including Walmart and Home Depot, recently met with federal regulators over Visa and Mastercard’s plan to combine their individual payment buttons on merchants’ online checkout pages.
The payment networks say the move will not only simplify the checkout process, but could also make cards less vulnerable to fraud through the use of a unique token for online transactions, which decreases the chance of cards being intercepted and reused.
At the heart of retailers' concern is that the move could prohibit them from routing their debit card transactions to lower-cost networks. They also believe that the setup raises concerns about how online transactions are treated under the Durbin amendment, which was part of the 2010 Dodd-Frank Act.
The Durbin amendment limited the interchange fees that networks could charge on debit card transactions and ensured that merchants could choose from more than one debit card network to route transactions.
Sources familiar with the matter said that the Retail Industry Leaders Association (RILA) met with the Federal Trade Commission (FTC) and the Federal Reserve this week to talk about those concerns, with representatives from Walmart, Home Depot, Walgreens Boots Alliance Inc. and Target, among others, in attendance.
The meeting comes several weeks after the FTC received a bipartisan letter from nine congressional representatives requesting that the regulator “closely review” standards that the large card networks are implementing and to ensure they aren’t “used to anti-competitive ends.”
In addition, the National Retail Federation (NRF) is planning to meet soon with federal regulators, including the Fed, the FTC and the Consumer Financial Protection Bureau (CFPB).
Large networks, however, say that the retailers' concerns are unwarranted. In fact, a Mastercard spokesperson said that tokenization won't be mandatory, so that debit card purchases made through the single-pay tab will allow merchants to route the transaction to whatever network they want.