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Why the FTC Isolated Mastercard With Its Pre-Christmas Consent Order

Digital Transactions

When the Federal Trade Commission announced two days before Christmas it had leveled a preliminary consent order against Mastercard Inc. to correct what the agency saw as roadblocks the card company had erected against routing online debit transactions to competing networks, the move may have surprised at least some observers. The surprise lay not in what the FTC had to say, but in what it omitted: the order left out Visa Inc., Mastercard’s main rival and a company the Commission had identified only two months earlier as a fellow actor in blocking debit routing to other networks.

Now it appears the FTC’s decision to issue an order against Mastercard alone may have stemmed from facts the Commission learned in the weeks following the news it was targeting both network giants. Like Mastercard, Visa protects transactions against fraud by using digital tokens in place of actual account numbers. But Visa in 2018 began detokenizing transactions on its network so they can be shipped to another network for processing if the alternative network was designated by an online merchant.

Many details about the process, known as a callout service, aren’t well-known, but the consequence is that Visa apparently escaped further action by the FTC. “Mastercard was refusing to do anything” about detokenizing its transactions, says one informed observer who spoke to Digital Transactions News on condition of anonymity. “Visa makes it difficult but not impossible. It made sense for the FTC to go after egregious violations first.”