According to a recent report from Bloomberg, the Federal Trade Commission (FTC) has ordered Mastercard to provide its competitors with customer account information that they need to process debit payments.
Debit cards occupy a significant place in the current economic landscape and payment card networks play a critical role in those debit card transactions.
Debit cards have ever-grown in popularity, enabling consumers to make easy purchases using their personal devices equipped with e-wallet applications such as Apple Pay, Google Pay, and Samsung Wallet.
The FTC has a duty to enforce federal competition and consumer protection laws that prevent deceptive, anti-competitive, and unfair business practices.
As such, the FTC is in full capacity to order an end to illegal Mastercard business tactics as this ultimately blocks competing debit card payment networks, thus breaching the Durbin Amendment to the Dodd-Frank and Fed regulations.
Cracking down on transactions
This enforcement action was taken in a 4-0 vote and resulted from a years-long investigation into Mastercard and Visa‘s policies prohibiting merchants from routing card transactions over alternative debit networks.
The investigation focused on whether the payment giants were violating part of the 2010 Dodd-Frank Act, which requires banks to enable at least two unaffiliated networks on every debit card.
Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement Friday, “This is a victory for consumers and the merchants who rely on debit-card payments to operate their businesses.” She continues by saying, “Congress directed the FTC to enforce this part of the Dodd-Frank Act and prevent precisely this kind of illegal behaviour. We take this responsibility seriously, as demonstrated by our action today.”
Consumer protection taken seriously
A pledge was made by FTC Chair Lina Khan additionally to use the agency’s full authority to crack down on corporate abuses of power. The announcement is the latest in a series of actions against large corporations, including Microsoft Inc., which the commission is suing over its $69 billion acquisition of Activision Blizzard Inc.
Furthermore, the FTC’s action aims to lower card acceptance costs by improving competition among networks and providing merchants with more choices in how they route such transactions.
It is not clear whether the FTC has reached a similar agreement with Visa.