The order targets the "tokenization" critical to mobile payments.
A smartphone with Apple Pay and Google Pay logos is placed on a laptop in this illustration taken on July 14, 2021. REUTERS/Dado Ruvic/Illustration
Igor BonifacicIgor Bonifacic|@igorbonifacic|December 24, 2022 6:43 PM

The FTC ordered Mastercard to give competing payment networks information they need to process debit card payments. The FTC proposed an enforcement action against Mastercard on Friday for allegedly violating a provision of the Dodd-Frank act.

tokenization is the technology that underpins mobile payment applications. When you use your phone's mobile wallet to make a credit or debit card purchase, the software replaces sensitive information, including the primary number associated with your account, with a separate set of single-usetokens. According to Mastercard and Visa, the practice prevents fraud since token contain no exploitable information. They point to someone when they arrive at Mastercard or Visa's server.

The FTC says Mastercard has stopped competing networks from accessing its vault. Merchants have to route the transactions over Mastercard and pay the company's transactions fees, which are typically higher than that of its competitors, if consumers decide to use a mobile wallet. The amendment requires banks to support two different payment networks. Competition among networks was promoted by the provision. The FTC didn't say if it had an agreement with Visa.

While we are taking these steps to bring this matter to a close, there should be no doubt that tokenized transactions give an increased level of protection to both consumers and merchants. The incentive for us to continue investing in innovations that promote the peace of mind every person expects is provided by the focus on security. Eisen said Mastercard would update its processes to comply with the consent order.

Comments from the public will be collected by the FTC before they vote on the order against Mastercard.

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