The Fed and FTC strike a blow for competition

Though there were doubters, the Federal Reserve and Federal Trade Commission recently proved that there is a cop on the beat ensuring that the debit reforms passed by Congress are followed.

Banks and others have focused their attention on the limits to price-fixing that debit reform brought, but reform also called for networks to compete with one another for transactions.

Visa, however, didn't want to compete with the likes of Star, Pulse, NYCE and others. Instead, with the transition to chip cards as subterfuge, Visa set up technical requirements for new chip card readers that interfered with merchants' ability to decide which network to use.

Suddenly, when shoppers inserted their new chip debit card into the computerized reader at the checkout counter, they were presented with a screen that said to select either "Visa Debit" or "U.S. Debit."

If they pushed "Visa," the transaction went directly to Visa's network, excluding other companies that might be cheaper or provide more security on the transaction from consideration.