The government agency alleges Mastercard has violated U.S. law and Federal regulations.

The United States Federal Trade Commission is ordering an end to what it says are illegal business tactics that Mastercard has been using to force merchants to route debit card payments through its payment network. In addition, the FTC is requiring Mastercard to stop blocking the use of competing debit payment networks.

The agency’s order is particularly focused on debit cards connected to digital wallet apps such as Apple Pay and Google Pay. They claim that Mastercard’s business practices in the digital wallet market violate the 2010 Dodd-Frank Act as well as other Federal regulations.

Under the FTC order, Mastercard will have to open up to share customer account information to competing debit card networks, so that those competing networks can also process debit payments. According to the agency, this will amount to a reversal of a practice the company was using to keep their competitors out of the e-commerce debit payment business. The FTC alleges that such practices were illegal and violated provisions of the Dodd-Frank Act known as the Durbin Amendment and its implementing rule, Regulation II.

Opening up the 4 trillion dollar debit card business

The debit card business has grown considerably now that consumers can use ewallet applications such as Apple Pay, Google Pay, and Samsung Wallet found on their mobile devices. Mastercard’s policy requires use of a token when a cardholder loads a Mastercard-branded debit card into an ewallet. Moreover, the FTC says that banks issuing Mastercard-branded debit cards “nearly universally” use Mastercard to generate the tokens and store the corresponding primary account numbers in its Mastercard “token vault”.

Under the FTC order, when a competing network receives a token to process a debit card payment, Mastercard is required to provide them with the customer’s personal account number that corresponds to the token.

The debit card business now amounts to $4 trillion a year and the processing fees charged by networks on those transactions total in the billions of dollars. Most of these fees are paid by the merchants to the card-issuing banks and the payment card networks.