Tokenization is a way of making payments more secure, by converting credit card and personal information into a 16-digit code—also referred to as a token. Tokens enable merchants and customers to shield their identifying information, making it more difficult for fraudsters to commit identity fraud.
In a recent article, we discussed the advantages and disadvantages of tokenization. While tokenization may be a leap forward in the industry, Visa and Mastercard are under investigation over debit-card routing.
According to the WSJ:
“The Federal Trade Commission is investigating whether Visa Inc. and Mastercard Inc’s security tokens restrict debit-card routing competition on online payments. The FTC for the past few years has already been probing whether Visa and Mastercard block merchants from routing payments over other debit-card networks. The networks acknowledged an FTC probe in regulatory filings in recent years.”
While the investigation is ongoing, the probe from the FTC may mean changes are coming, which is a good sign for merchants.