FTC orders Mastercard to give competing payment networks debit card processing details. In a proposed enforcement action released Friday, the FTC argued Mastercard violated the Durbin Amendment by banning retailers from using other networks.
“Tokenization” underpins Apple Pay, Google Pay, and Samsung Pay. When you use your phone’s mobile wallet to make a debit or credit card purchase, the software replaces sensitive information, like your account number, with single-use “tokens.” Mastercard and Visa said tokens don’t include exploitable information in transit, preventing fraud. They only point to someone when they reach Mastercard or Visa’s servers and are mapped to their original account holder.
Mastercard has blocked access to its token vault, according to the FTC. Merchants have to route mobile wallet transactions through Mastercard (or Visa) and pay the company’s higher transaction fees. The Durbin Amendment mandates two competitive debit card payment networks. Congress passed it to boost network competition. The FTC didn’t specify if Visa achieved a comparable arrangement.
Mastercard representative Seth Eisen said tokenized transactions protect consumers and merchants. This focus on security directs our efforts in a competitive market and encourages us to invest in solutions that promote peace of mind. Mastercard will “keep updating our practices to comply with the consent decree and offer more choice,” said Eisen.
Before finalizing the ruling against Mastercard, the FTC will collect public comments.