Visa & Mastercard under FTC investigation over debit-card routing competition

Visa Inc and Mastercard Inc are currently under investigation by the Federal Trade Commission. The FTC is concerned to know whether the security token limit debit-card routing for online payments. 

Known as one of the two biggest card networks in the US, Visa and Mastercard allow people to route their payments. 

The FTC has been keeping an eye on Visa and Mastercard for a few years, inquiring whether both prevent business owners from making payments through different debit card networks. The FTC has increased its focus on the matter.

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Earlier a Justice Department investigation was conducted to know whether Visa Inc has illegally maintained a monopoly on the debit card market share. This was done because as per federal laws, the customers must be provided with a choice of at least two debit card networks for making payments, The Wall Street Journal reported. 

This month, the Federal issued an updated rule to the banks, referring that each customer must be given at least two networks on all debit cards incldign online shopping or payments.

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Whenever a customer links a debit card with a digital wallet, a random 16-digit number is generated, referred to as a “security token” as it makes the payment easy. The token is only understood by the network. For example, if using Visa, then only Visa will be able to make the payments easy. However, the card network can also scramble the token if the debit is handled by another network. 

Doing this practise, Visa and Mastercard continue to remain on top.

However, customers complain regarding the process believing that the payments can be cancelled if it’s handled by a different network. 

This is the reason, the FTC is inquiring whether the top card networks are restricting payments after the shopper enters their debit card information. 

(With inputs from agencies)

 

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