STATEMENT: FTC orders end to Mastercard’s ‘illegal business tactics’

Agency will require company to stop blocking competing debit card payment networks

WASHINGTON — The Federal Trade Commission (FTC) announced Friday that it “is ordering an end to illegal business tactics that Mastercard has been using to force merchants to route debit card payments through its payment network, and is requiring Mastercard to stop blocking the use of competing debit payment networks.” The FTC alleges that Mastercard’s tactics violated provisions of the 2010 “Durbin amendment” to the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In response, Ed Mierzwinski, U.S. PIRG’s senior director of federal consumer program, issued the following statement:

“The FTC’s action might be called ‘priceless,’ to borrow from a long-running Mastercard ad campaign. It’s priceless to the merchants who’ve incurred higher costs when they’ve allegedly been blocked from using competing payment networks in violation of the Dodd-Frank Act. If the FTC’s allegations are accurate, by limiting merchant choices, Mastercard’s tactics have raised their costs, which, not surprisingly, then are passed on to consumers in the form of higher prices. That behavior would help protect Mastercard’s share of the payment network duopoly from competition.

“U.S. PIRG supported the 2010 amendment by Sen. Dick Durbin (IL) and a recent companion action by the Federal Reserve Board to improve debit card routing under the Durbin Amendment’s regulations. We also support current bipartisan, bicameral legislation, the Credit Card Competition Act, led by Sen. Durbin to extend debit card routing choices to the credit card market. It would require the largest credit card-issuing banks to  similarly offer a choice of at least two unaffiliated networks to process credit transactions, as well as debit transactions.”