The FTC mandates that Mastercard accept debit transactions from other payment networks

Mastercard has been ordered by the Federal Trade Commission to begin giving rival payment networks the data they require to handle debit card payments. The FTC said in a proposed enforcement action made public on Friday that Mastercard had allegedly violated the Durbin Amendment of the Dodd-Frank Act by forbidding merchants from routing transactions over alternative networks.

The “tokenization” technology that powers mobile payment services like Apple Pay, Google Pay, and Samsung Pay is the object of the case. When you use the mobile wallet on your phone to make a transaction using a debit or credit card, the software replaces sensitive data, such as the primary number linked to your account, with a different set of one-time use “tokens.”

Since tokens don’t contain any information that could be used for fraud while in transit, MasterCard and Visa claim that the method prevents it. They don’t point to anyone until they reach Mastercard or Visa’s computers and are mapped back to the original account holder.

The FTC claims Mastercard has long prevented rival networks from accessing their token vault. This implies that anytime customers choose to pay with a mobile wallet, retailers are required to route the transactions through Mastercard (or Visa) and pay the company’s transaction fees, which are frequently higher than those of its rivals.

Mastercard will provide greater choices

According to the Durbin Amendment, banks must provide two rival payment networks for all debit cards. It was a clause Congress added to encourage network competition. However, if a comparable deal was made with Visa, the FTC did not specify.


The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 included the Durbin Amendment. It placed a limit on the processing fees large banks (assets of more than $10 billion) can charge businesses using debit cards. Additionally, it compelled Visa and Mastercard to offer merchants the choice to route those payments over at least two independent networks, including their own, as well as a separate processing network like Star, NYCE, or Shazam, which typically offers lower swipe fees and comparable, or perhaps even superior, security.

“While we are taking these steps to bring this matter to a close, there should be no question that tokenized transactions provide increased protection to both consumers and merchants,” Mastercard spokesperson Seth Eisen said.

“This focus on security guides our efforts in a highly competitive market and provides the incentive for us to continue investing in innovations that promote the peace of mind every person expects.” Eisen added that Mastercard would “continue to work on updating our processes to comply with the consent order and provide even greater choice.” Before imposing the injunction against Mastercard, the FTC intends to gather public feedback.