Major retailers are lobbying the federal government over a proposal from Visa Inc. and Mastercard Inc. that would combine their payment options on e-commerce platforms, a move retailers said could increase costs associated with processing customer payments.
Trade groups representing the retailers are leading the charge. The Retail Industry Leaders Association, or RILA, met earlier this week with the Federal Trade Commission and the Federal Reserve to discuss the proposal, according to The Wall Street Journal. Additionally, the National Retail Federation, or NRF, told S&P Global Market Intelligence May 24 that it plans to meet with the same bodies in the next few weeks.
The proposed change would combine payment options from both companies as they appear on retailers' online checkout web pages, according to the Journal's report. While the card issuers say the change would make transactions more secure and easier for consumers, the retail groups have pushed back, saying the proposal would keep them from using low-cost networks to process some payments.
RILA counts many of the country's largest retailers, including Target Corp., Walmart Inc., Home Depot Inc. and Walgreens Boots Alliance Inc., among its members. A spokeswoman for RILA did not immediately respond to a request for comment from S&P Global Market Intelligence, and a spokeswoman for the NRF declined to comment beyond confirming the group's intent to meet with federal officials.
Neither Visa nor Mastercard immediately responded to requests for additional comment from S&P Global Market Intelligence.
A key component of the change would involve the use of so-called "tokens" by Visa and Mastercard. Tokens are used to encrypt account numbers and other payment information, and retailers argue that the single-click button will force them to use the payment companies' tokens and pay their fees, according to the Journal.
Spokespersons for Visa and Mastercard told the Journal that those concerns are "overblown" and that retailers will be able to opt out of using the token technology.
