The United States’ law enforcement agency is investigating payment processing giant, Visa over practices related to its tokenization technology, Bloomberg reported today (Wednesday), citing anonymous sources. Specifically, the probe is reportedly related to the company’s practice of charging merchants more when they do not deploy its technology for protecting cardholder information.

Visa Faces New DOJ Investigation

Tokenization Tokenization Tokenization represents the process of substituting a sensitive data element with a non-sensitive equivalent, i.e. token, which bears no extrinsic or exploitable meaning or value. In essence, the rights to the ownership of an asset are converted into a digital token. Tokenization can be used to own an entire unit of an asset. For example, one token that represents the ownership of a piece of real estate or to split ownership of a single unity of an asset such as 200,000 tokens, each one represen Tokenization represents the process of substituting a sensitive data element with a non-sensitive equivalent, i.e. token, which bears no extrinsic or exploitable meaning or value. In essence, the rights to the ownership of an asset are converted into a digital token. Tokenization can be used to own an entire unit of an asset. For example, one token that represents the ownership of a piece of real estate or to split ownership of a single unity of an asset such as 200,000 tokens, each one represen Read this Term is a security technology that substitutes sensitive data such as account numbers with a special, one-time-use set of numbers known as a ‘token’. The technique helps to boost protection against data leaks and other security threats by ensuring that actual payment data are not stored on a merchant's systems.

The latest probe into Visa’s tokenization technology, which was introduced in 2014, comes less than a year after the Federal Trade Commission ordered the payment processor’s rival, Mastercard, to start sharing customer account details with competing networks so that they can process their customer’s payment orders.

Unlike Mastercard, Visa has been granting access to that information to rival networks for years, according to an insider source quoted by Bloomberg However, this service attracts a higher fee compared to what the firm charges when its technology is adopted for such purpose.

Meanwhile, Visa has been making plans to implement its regular fee adjustment schedule. The payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term company and its partners informed customers of these upcoming changes, according to a document seen by Bloomberg. However, insider sources believe the planned move renewed the DOJ’s interest in Visa’s tokenization technology policy.

Regulatory Case in the UK

Last year, Visa and Mastercard also attracted the attention of the Payment Systems Regulator (PRS), the regulatory authority for the payments industry in the United Kingdom where both companies command about 99% of the debit and credit payments market. The watchdog sought a pair of market reviews on the rising card fees charged by the rival companies, Finance Magnates reported.

“Cards are the most popular way for consumers to make a payment. To accept card payments, merchants must pay certain fees which can ultimately impact the cost we all pay for goods and services,” Natalie Timan, the Head of Strategy at PSR, explained at the time. “We want to understand whether card payments are working well and to make sure that merchants, and ultimately consumers, get a good deal.”

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