By Andrew R. Johnson
The Federal Trade Commission has asked Visa Inc. (V) for
information regarding possible violations of new rules for
debit-card processing that took effect under the Dodd-Frank Act,
the company said Friday.
The FTC's Bureau of Competition made the request in a Voluntary
Access Letter on Sept. 21, which asked Visa to supply documents and
information on a voluntary basis, the Foster City, Calif.-based
company disclosed in its annual 10-K report filed with the
Securities and Exchange Commission.
Visa said the request focuses on the "purposes, implementation,
and impact of" its "optional PIN Debit Gateway Service." The
company said it is cooperating with the bureau, and that revenue
from the service is not material.
Spokesmen for Visa in California could not immediately be
reached for comment Friday morning.
The FTC letter is the latest move by regulators to probe Visa's
response to the Durbin amendment, a provision of 2010's Dodd-Frank
Act that ushered in new limits on fees merchants pay to accept
debit cards and new requirements for how debit-card transactions
are processed.
The U.S. Justice Department has been investigating
business-practice changes Visa made in response to the act, the
company disclosed in May.
Earlier this year, Visa rolled out a new pricing strategy
intended to protect its dominant share in the debit-card market in
response to a part of the regulation that took effect in April that
requires banks to include multiple processing networks on their
cards.
Visa and its largest competitor, MasterCard Inc. (MA), do not
lend or issue cards to consumers; rather, they operate processing
networks that handle transactions for banks that issue their cards
and banks that work with merchants.
In the past, a card-issuing bank might have used Visa
exclusively to process debit transactions authorized with a
consumer's signature and Visa's Interlink debit network to
authorize transactions made with a PIN. Such deals are no longer
allowed under the Durbin amendment, meaning that the same bank had
to either add a PIN debit network that isn't operated by Visa, such
as MasterCard's Maestro network, to its cards or replace Interlink
entirely with a different provider.
The intent was to give merchants more control over their
processing costs by giving them more options over which networks to
route the transactions made in their stores.
Visa's new pricing strategy includes a fixed fee that must be
paid to plug into Visa's network, variable fees on each transaction
and incentive payments to merchants--a move meant to entice
merchants to continue routing transactions through Visa.
Visa also launched a service enabling it to process PIN debit
transactions even if its PIN debit network is not equipped on a
bank's debit cards. The move has concerned some of its competitors,
such as Discover Financial Services (DFS), which operates a
competing PIN debit network called Pulse.
Discover said in October that the DOJ asked it for information
about possible antitrust violations by another party, which
analysts have said is likely Visa.
Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com