DOJ endorses interchange rule that credit unions hate
Department of Justice
A fight is brewing between the Biden Administration and credit union trade groups over a Federal Reserve proposal to require financial institutions to give merchants a choice of debit card networks for online transactions and other purchases when consumers do not physically present their debit cards.
The Justice Department this week threw its support behind the Fed’s proposed rule, saying it would enhance competition and save consumers money. Credit union trade groups, on the other hand, said that the proposal would increase compliance costs, while not passing any savings on to consumers.
The Fed issued a notice of proposed rulemaking in May, saying it was proposing the rule in light of information showing that often only one network is available for such transactions.
“The absence of at least two unaffiliated networks for card-not-present transactions forecloses the ability of merchants to choose between competing networks when routing such transactions, an issue that has become increasingly pronounced because of continued growth in online transactions, particularly in the COVID-19 environment,” the Fed said, in requesting comment on the proposal.
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