U.S. Justice Department tosss weight behind new debit card rule

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WASHINGTON, Aug 11 - The U.S. Justice Department on Wednesday tossed its weight behind a proposed rule change that would require banks and other ink options to merchants to provide multiple network options to route online purchases.

The move, made in a comment letter filed by the DOJ's Antitrust Division to the Federal Reserve, underlines the Biden administrations renewed efforts to bolster the government's antitrust efforts.

We commend the Board for its efforts to promote competition in this important part of the debit card industry, Richard Powers, acting assistant attorney general for antitrust division, said in a statement. There is limited competition to process online and other card-not-present debit transactions — which in 2019 accounted for more than $3 trillion in transaction value.

In July, President Joe Biden signed an executive order ordering government agencies to curb anticompetitive behavior across a range of industries, including banking.

The rise of online commerce spurred the Fed to revisit its interchange rule in May 2011, reproposing a portion to ensure debit card providers offer multiple networks to merchants for transactions where the card is not physically present. The Justice Department says that move could ultimately reduce costs for consumers.

Reuters reported earlier that Visa Inc was investigating the Justice Department for anticompetitive practices in the debit-card market, including directing merchants to pricier networks to route transactions.

Since 2013, rules around so-called swipe fees have been a fierce lobbying battleground for banks and major retailers since 2010 Dodd-Frank changes directed the Fed to cap how much bank charge to process transactions.

When the Fed announced it was revisiting the rule, several large bank lobbying groups said in a joint statement that the policy has been flawed from the beginning and looking at it risks causing even further consumer harm.