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CoverStory

District court sides with card brands challenge to the rule, the bureau "determined the rule is
unlawful and should be set aside."
In another heartening development, the card brands
deflected a court case brought by disgruntled merchants. The open banking rule would have required FIs with more
A U.S. district court judge in Illinois dismissed a lawsuit than $850 million in assets to open access to consumer
accusing Mastercard and Visa of conspiring with Apple to financial account data they maintain to data aggregators
suppress network competition and causing merchants to (think Quicken, Plaid) designated by consumers, and to
pay inflated prices for processing transactions. do so free of charge.

District Court Judge David Dugan ruled merchants hadn't "This provides a recognition and structure for allowing
provided enough evidence to support their claim that banks to monetize their businesses," Ken Musante,
Apple illegally declined to launch a competing payment president of Napa Payments and Consulting, noted.
network to rival Visa and Mastercard. They only presented
a "slew of circumstantial allegations," he wrote. Almost immediately following the news, JPMorgan Chase
stated it would begin charging third parties seeking such
Retailer Mirage Wine and Spirits led the lawsuit, a class data. According to reporting by Bloomberg News, the mega-
action, which reportedly included thousands of other bank sent pricing sheets to data aggregators outlining new
merchants. The lawsuit alleged Visa and Mastercard charges that may vary by use case, with payment-focused
paid "ongoing cash bribes" that amounted to hundreds of firms facing the highest fees. Other banks are sure to
millions of dollars a year to keep Apple from competing follow Chase's lead.
with them.
Clarity around merchant‑assessed fees
Visa and Mastercard denied the allegations and countered
that their agreements with Apple expressly preserved the Visa generated favorable news, as well, by providing rule
right for the company to compete with them. Apple, for its clarity, through acquirers, about how and when merchants
part, claimed it never had plans to compete with Visa and can assess various types of fees (surcharges, service fees,
Mastercard. convenience fees) on payments and what constitutes
compliance.
Durbin credit card bill stymied
For example, Visa made it clear that a surcharge not
Reassuring news came out of Washington, too. Efforts exceeding 3 percent of the ticket can be assessed in the
to get congressional approval of what some are calling 46 states that allow surcharging, but only on credit card
Durbin 2.0 have been thwarted. Senators Dick Durbin, transactions. Merchants are not required to register to do
D-Ill., and Roger Marshall, R-Kan., have tried at least twice, so, but must notify their acquirer, Visa and Mastercard at
and failed, to attach the Credit Card Competition Act to least 30 days before implementation of such fees.
must-pass legislation this year, most recently, the GENIUS
Act, which created a regulatory structure for stablecoins. The existence of a surcharge must be disclosed before the
transaction occurs, and the disclosure must make it clear
The Credit Card Competition Act has been dubbed that the surcharge is being assessed by the merchant, not
Durbin 2.0 because it would have a dramatic impact on the card brands, to cover their processing costs. Notices
credit card issuers, much as the Durbin Amendment to are required at the point of entry and the point of sale, or
the Dodd-Frank Act had on debit card issuers. Specifically, verbally disclosed when an order is taken over the phone
the legislation would require large banks (those with over
$100 billion in assets) to enable at least two unaffiliated Additionally, any surcharge must be listed as its own line
networks to process transactions initiated with the cards item on the receipt. Non-compliance will result in fines,
they issue, but only one of those networks could be with each card brand handling fines differently. "Now
affiliated with Visa or Mastercard. The idea being that that Visa has finalized both the rules and enforcement,
merchants would choose lower cost options. we can expect more merchant acceptance and less rogue
pricing," Musante said.
Meanwhile, a Federal Reserve proposal to lower the
debit card interchange cap remains in limbo. The cap is Feds diss checks, promote EFT
currently 21 cents plus 0.05 percent of the transaction and
a penny to cover investments in fraud prevention. A Fed
proposal first floated in the fall of 2023 would lower the And there's positive movement on the EFT front. The
cap to 14.4 cents plus 0.04 percent and a fraud prevention federal government is sunsetting its use of checks, which
adjustment of 1.3 cents means more payments for electronic payment networks.
Under an executive order handed down in March 2025, all
Open banking rule on the chopping block government payments will be made using direct deposit,
prepaid cards and other digital payment methods,
In addition, the Consumer Financial Protection Bureau beginning Sept. 30.
plans to rescind the open banking rule it adopted in
October 2024. According to a legal filing in response to a
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