FTC investigating Visa, Mastercard security tokens

In an Oct. 17, 2022, article titled "Visa, Mastercard Draw New Government Scrutiny Over Debit-Card Routing," the Wall Street Journal reported the Federal Trade Commission is investigating Visa and Mastercard's security tokens (Visa Token Service and Mastercard Digital Enablement Service) for potentially restricting debit card routing competition in online payments.

The Journal's report noted that the FTC is already investigating the two major card brands for alleged blocking of merchants from routing payments over other debit card networks. The tokens, which replace cardholder information with a unique digital identifier, are of additional interest to the FTC for potentially inhibiting merchants' processing of debit card transactions on rival networks.

Congress is approaching Visa and Mastercard's practices from another direction. On Oct. 5, 2022, in "Network routing under attack," The Green Sheet reported that Senator Richard Durbin, D-Ill., wants to put his proposed new credit card routing rules on the legislative fast track. He and Senator Roger Marshall, R-Kan., proposed an amendment to a major defense funding bill that mirrors legislation the two introduced in July 2022 to allow merchant choice in the routing of credit card payments.

The proposed Durbin-Marshall legislation would require the Federal Reserve to issue regulations ensuring that merchants get to choose which networks process their credit card payments, and only one of the choices can be Visa or Mastercard. That could create a boon for debit networks like Star and NYCE, as well as the American Express and Discover networks. In a related development, the Federal Reserve finalized changes to its rules requiring merchant choice in debit card routing.

Scrutiny is nothing new for Visa and Mastercard. In 2019, for example, Visa settled a European Union antitrust probe over card fees.

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