Saturday, June 3, 2023

Mastercard ‘under the magnifying lens’: US executives review its debit card business

master card said the US Justice Department is probing whether the company engaged in anti-competitive actions in its debit card business, a sign that the agency is expanding an investigation that previously focused on its rival.

MasterCard said received a civil inquiry suit department looking for documents last month about a Possible violation of certain sections of the Sherman Act, a comprehensive law aimed at protecting competition. The company is cooperating with the investigation, which focuses on the firm’s US debit program and competition with other networks and technologies, according to a quarterly regulatory filing.

The move comes nearly two years after the Justice Department launched a similar investigation of visa practices, In January, the agency’s Antitrust Division issued additional civil investigative subpoenas to Visa seeking additional documents and information for the investigation, which Visa has said it is cooperating with.

“It’s not surprising that the Department of Justice requests information from other players in the debit space,” Mastercard CFO Sachin Mehra said in an interview. “It’s hard to speculate on the likely outcome, but this type of investigation takes years.”

Department of Justice started it Checking Visa’s Debit Practices after suing the company over plans to purchase Plaid for $5.3 million. At the time, the Department argued that the combination further debit card transactions will mimic competition in the market Online. Both companies eventually backed out of the deal.

The Justice Department investigation is a 2010 law known as the Durbin Amendment, which requires banks to include two competing networks on their debit cards.

The idea is that merchants should have a choice: they can route transactions through a major network. Visa Or MasterCard, or they can use a smaller option. Those with names like Pulse, Star, and NYCE can be cheap for network traders.

But in recent years, merchants have complained they’ve had trouble using alternative networks to shop online. As a result, the Federal Reserve agreed in October to rewrite its rules governing debit card transactions, directing banks to ensure they have the necessary resources to process all debit card transactions, including digital purchases. Always have at least two payment networks enabled.

World Nation News Desk
World Nation News Desk
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