FTC Probes Competition In Visa, Mastercard Debit Routing Practices

The Federal Trade Commission (FTC) is reportedly looking into whether Mastercard and Visa’s security tokens prevent debit-card routing competition on certain digital payments.

That’s according to a Monday (Oct. 17) report by The Wall Street Journal (WSJ), citing unnamed sources familiar with the matter.

The report notes that the FTC has already been investigating whether Visa and Mastercard prevent merchants from routing payments over other debit-card networks, a probe that began in 2019, but noted that it was unclear it the security token probe was part of that investigation or being handled separately.

Visa and Mastercard declined to comment on the WSJ report when reached by PYMNTS Monday afternoon.

Sources tell the Journal that the FTC is investigating whether the two card giants have been restricting the information they send when allowing an online payment to move over a different network. Merchants say this alleged practice raises the likelihood that the card’s issuing bank will reject the purchase when it is handled over a different network.

The commission is also examining whether Mastercard and Visa are restricting route choice after consumers store debit card info on merchant apps, websites, or pay tab buttons, the sources said.

Proposed federal legislation aims to offer consumers more routing choice when using the card networks. The Credit Card Competition Act (CCCA) is designed to dilute the market power of the two card issuers and would require several changes, among them the requirement that merchants have at least one network for card transactions unrelated to Visa or Mastercard.

Last week, Sen. Dick Durbin (D-Ill.) and Sen. Roger Marshall (R-Kan.) unsuccessfully tried to slip the Credit Card Competition Act of 2022 into the National Defense Authorization Act (NDAA), leading to alarms from banks, credit unions, and other financial service providers who say the move would hurt credit card loyalty programs.

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