(Rejected) US FTC is investigating Visa and Mastercard for Security Tokens:WSJ

For the past few years, the U.S. Federal Trade Commission (FTC) has been investigating Visa and Mastercard over whether their security tokens prevent merchants from making payments through other debit card networks, the Wall Street Journal reported, citing sources.

Federal law requires merchants to have the ability to choose from at least two separate debit card networks to route transactions.

For e-commerce platforms or trading platforms, in order to ensure the integrity and success rate of their own transaction payments, they generally consider accessing multiple payment channels. How to switch between channels to ensure the success rate of the business, and at the same time, in the used channels, using low-cost channels is the value of payment routing.

Visa and Mastercard are by far the two largest credit card networks in the United States. Its increased dominance has come under increasing scrutiny. Visa was the subject of an antitrust investigation into credit card fees by the European Commission in 2019.

For example, when a user stores a debit card in a digital wallet like Apple Pay, the debit card number is tokenized by Visa and Mastercard and replaced by their "security token" - essentially a line of random numbers.

The technology replaces sensitive account information with a unique digital identifier called a "security token".

The token is usually provided by the network listed on the card (usually Visa or Mastercard), and only Visa/Mastercard understands the token so that it can be re-associated with the actual card, blocking other online payment network channels.

In recent months, the FTC has expanded its focus to security tokens.

Tokens as something that people send to payment networks when they buy, the FTC is investigating whether Visa and Mastercard have been limiting the information they send, thereby restricting online payments from being made through different networks,

According to the merchant, this so-called practice increases the chances of the card-issuing bank rejecting the transaction when it is processed by another network.

It has not yet been determined whether the investigation is a new one or part of a previous one.