This article in the Wall Street Journal indicates that plans by Mastercard and Visa to combine their online payment buttons have made merchants so angry they are contacting federal regulators:
“The merchants say the new proposed setup increases concerns about how online transactions are treated under the Durbin amendment, which was part of the 2010 Dodd-Frank Act. The amendment, named after Sen. Richard Durbin (D., 111.), capped the interchange fees that networks could set on debit-card transactions and required that merchants have the ability to choose from more than one debit-card network to route transactions.
The Retail Industry Leaders Association met with the Federal Trade Commission and the Federal Reserve this week to flag concerns, according to people familiar with the matter. In attendance were representatives from Walmart, Home Depot, Walgreens Boots Alliance Inc. and Target Corp. ,among others, the people said.”
Unsurprisingly the networks disagree with the merchant’s evaluation of the situation:
“The large networks say many of these concerns are overblown and that tokenization won’t be mandatory. A Mastercard spokesman said that tokenization through the single-payment button will be an option, meaning that debit-card purchases made through the single-pay tab will allow for the full account number to be transmitted and thereby allow merchants to route the transaction to whatever network they want.
Merchants could also be able to send those payments to the smaller debit networks and those networks will then contact Visa to decode the token. A Visa spokeswoman said that ‘merchants are critical partners to Visa. We are committed to providing them with effective and seamless payments services to help them grow their business.’ ”
This battle over tokenization and card fees will almost certainly expand because merchants have the ability to promote the World Wide Web Consortiums Payment API Standard as an alternative method for online payments. It will be interesting to see how this develops!
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group