On Tuesday, the Federal Trade Commission issued an order requiring Mastercard to allow competing networks access to customer information and to cease preventing merchants from using alternative networks to process debit payments. The commission made this announcement on Wednesday.
The FTC order is anticipated to increase competition in payment networks and decrease swipe fees over time by permitting choice in the marketplace.
The FTC has taken action in response to Canada’s decision to reduce swipe fees by 27%, with a similar concept to the proposed Credit Card Competition Act legislation by Sen. Dick Durbin (D-Illinois).
Related: FTC Probes Competition In Visa, Mastercard Debit Routing Practices
The FTC has accused Mastercard of violating the Durbin Amendment and Regulation II by allegedly prohibiting merchants from routing debit-card payments through alternative networks. These regulations require banks to enable at least two unaffiliated payment networks on every debit card to provide choice in the payments marketplace.
The absence of competition may lead to increased transaction fees. The In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, which began in 2005, focused on swipe fees.
