Report: DOJ Investigates Visa Merchant Practices

Department of Justice

Visa is reportedly the target of a Department of Justice (DOJ) probe into its tokenization practices.

The DOJ’s interest in Visa is part of a long-running investigation, Bloomberg reported Wednesday (Aug. 16).

Officials are looking into Visa’s policy of charging more to merchants who don’t use its tokenization system, which protects cardholder information by swapping card numbers for tokens that can only be used with specific devices and merchants, the report said.

PYMNTS has contacted Visa for comment but has not yet received a reply. The DOJ declined to comment.

The news comes months after Visa revealed it was cooperating with an investigation by the DOJ into its debit card practices. That probe sought “documents and information focusing on U.S. debit and competition with other payment methods and networks,” Visa said in a Securities and Exchange Commission (SEC) filing in January.

The DOJ’s antitrust arm began investigating Visa in 2021 for allegedly anticompetitive debit card processes in the debit card space.

Last year, rival Mastercard agreed to a Federal Trade Commission (FTC) order requiring the company to share the customer account information needed to process debit payments with competing networks. That order also focused on Mastercard’s use of tokens.

PYMNTS looked at the value of network tokenization in a report in June on payment vaults, noting that the underlying network token can be used to transact independently from a credit card’s payment account number (PAN).

Modern vaults can provision network tokens automatically when a new card is being stored,” the report said. “That network token can then transact independently of the underlying PAN.”

Not only does this cut back on the need to rely on manual updates to card information by customers, but it also lowers costs while providing other benefits, like higher throughput and reduced processing costs.

This setup is important to consumers who want both convenience and security with their transactions, with 56% saying they choose stored credit cards over inputting payment information manually because it is more convenient.

“The less customers must do to complete transactions, the happier they are — and the more likely they are to complete them,” PYMNTS wrote in June.