America's FTC Demands End to Mastercard's 'Illegal' Blocking of Competing Debit Card Payment Networks (ftc.gov) 16
Friday America's Federal Trade Commission issued an announcement on what it called "illegal business tactics that Mastercard has been using to force merchants to route debit card payments through its payment network," saying the FTC is now requiring Mastercard "to stop blocking the use of competing debit payment networks."
The popularity of debit cards has been growing especially quickly for purchases consumers make using their personal devices equipped with ewallet applications such as Apple Pay, Google Pay, and Samsung Wallet. Payment card networks play a critical role in those debit card transactions....
Payment card networks compete for the business of banks that issue cards and for the business of merchants that accept card payments. Mastercard, along with Visa, is one of the two leading payment card networks in the United States. The processing fees charged by networks total billions of dollars every year, affecting every purchase made with a debit card, according to the FTC. Most of these fees are paid by the merchants to the card-issuing banks and the payment card networks....
Mastercard was flouting the law by setting policies to block merchants from routing ecommerce transactions using Mastercard-branded debit cards saved in ewallets to alternative payment card networks, including networks that may charge lower fees than Mastercard, the FTC alleged. Specifically, Mastercard used its control over a process called "tokenization" to block the use of competing payment card networks, the agency alleged. Transactions commonly are "tokenized" by replacing the cardholder's primary account number with a different number to protect the account number during some stages of a debit transaction. Tokens are stored in ewallets such as Apple Pay, Google Pay, and Samsung Wallet and serve as a substitute credential to provide additional protection for a cardholder's account number....
According to the FTC, Mastercard refuses to provide conversion services to competing networks for remote ewallet debit transactions...thereby making it impossible for merchants to route their ewallet transactions on a network other than Mastercard.
Payment card networks compete for the business of banks that issue cards and for the business of merchants that accept card payments. Mastercard, along with Visa, is one of the two leading payment card networks in the United States. The processing fees charged by networks total billions of dollars every year, affecting every purchase made with a debit card, according to the FTC. Most of these fees are paid by the merchants to the card-issuing banks and the payment card networks....
Mastercard was flouting the law by setting policies to block merchants from routing ecommerce transactions using Mastercard-branded debit cards saved in ewallets to alternative payment card networks, including networks that may charge lower fees than Mastercard, the FTC alleged. Specifically, Mastercard used its control over a process called "tokenization" to block the use of competing payment card networks, the agency alleged. Transactions commonly are "tokenized" by replacing the cardholder's primary account number with a different number to protect the account number during some stages of a debit transaction. Tokens are stored in ewallets such as Apple Pay, Google Pay, and Samsung Wallet and serve as a substitute credential to provide additional protection for a cardholder's account number....
According to the FTC, Mastercard refuses to provide conversion services to competing networks for remote ewallet debit transactions...thereby making it impossible for merchants to route their ewallet transactions on a network other than Mastercard.
Missing the point. (Score:2)
They say nothing of how the marketplace lacks another viable token vault!
Are you on crack? This is a basic concept, not something mastercard came up with.
https://cardconnect.com/launch... [cardconnect.com]
here's VISA's version: https://usa.visa.com/products/... [visa.com]
Re: (Score:2)
This is a basic concept, not something mastercard came up with.
**rolls eyes** OBVIOUSLY!
I'm not arguing for FTC's complaints; I'm mentioning FTC's lack of breadth in their complaint. You've missed MY point.
In fact, your comment reinforces the weakness of FTC's complaint.
This Can't Happen In Canada, Here's Why (Score:4, Informative)
Credit card companies do not provide this service. In the early 1980s (we've had near ubiquitous bank machines here since around 1981), all the Canadian banks created a middleman organization to handle transactions between all the debit machines, including bank machines belonging to different banks. It's called Interac. All debit transactions go through Interac. It was non-profit till 2018. All e-transfers in Canada go through Interac as well, and the Bank of Canada has oversight of e-transfer services since they have become an integral part of financial transactions here. If America wants to solve this problem, that would be the best way.
Re: (Score:1)
. ... If America wants to solve this problem, that would be the best way.
Exactly right! And there is the rub...America would rather not solve stealing from customers because it is so much easier and more profitable. Crime pays, MC can't slam you with outrageous interest if it transacts to your debit account cash. Any possible excuse to delay any debit transaction through available credit is the only way MasterCard knows how to remain profitable without effort: by screwing their customer in every conceivable way. They are like wolves at the slaughter - honing in on the young,
Re: (Score:2)
This is almost exactly how either Visa or Mastercard was formed, and then it was spun off and eventually IPO'd.
Re: (Score:2)
Credit card companies do not provide this service. In the early 1980s (we've had near ubiquitous bank machines here since around 1981), all the Canadian banks created a middleman organization to handle transactions between all the debit machines, including bank machines belonging to different banks. It's called Interac. All debit transactions go through Interac. It was non-profit till 2018. All e-transfers in Canada go through Interac as well, and the Bank of Canada has oversight of e-transfer services since they have become an integral part of financial transactions here. If America wants to solve this problem, that would be the best way.
It's the same for most developed nations that they have a very low fee interbank transaction network.
America's? (Score:2)
Yeah, even on Christmas, I'm still complaining about calling countries by their nickname. I don't see any headlines about La Gaule's ECC. If we need to be specific when talking about an agency that is clearly in the U.S. anyway, why are we so casual about the name of the country?
They got busted for this in Australia. (Score:2)
Here to n Australia if you tap with a Debit MasterCard that transaction can either go through the MasterCard network or the EFTPOS network (with merchants deciding where their transactions would be routed)
MasterCard was offering merchants a discount on the fees they pay for MasterCard credit cards (which always go through the MasterCard network) if those merchants also ran Debit MasterCard transactions through the MasterCard network and not the EFTPOS network. This is illegal and MasterCard got busted for i
That's a start (Score:3)
So, why get a Mastercard at all? (Score:2)
Why would you get a Mastercard in the first place... or at all... if not for their payment network? That's kind of the whole thing they're selling and you made the choice to buy it when you applied for that card versus equivalent options with Visa, AmEx, and Discover (an their associated payment networks. If you don't want to use Mastercard's payment system, choose a different card.