Visa faces Justice Department probe into 'token' pricing - Bloomberg

Investing.com -- Visa (NYSE:V) is facing heightened scrutiny from the U.S. Justice Department over how much the payment group charges merchants for technology it uses to safeguard cardholder data, Bloomberg News reported Wednesday.

The service, known as "tokenization," substitutes a cardholder's 16-digit account number with a token that applies to specific devices or merchants. Only Visa can unlock the token.

DoJ officials have now begun to investigate Visa's policy of charging retailers more if they choose not to use this technology, Bloomberg reported, citing people familiar with the situation. The probe is the latest development in a more than two-year investigation by the DoJ into allegations that Visa is attempting to monopolize the debit card market. 

Shares in Visa were little changed in early trading.

San Francisco-based Visa argues that the technology, which it first introduced in 2014, helps protect digital payments as cardholder information passes from merchants to banks. More than 4 billion tokens have now been issued, with 13,000 retailers using the service.

Spokespeople for Visa and Justice Department officials declined to comment, Bloomberg said.

According to a document seen by Bloomberg, merchants were informed in recent weeks that Visa and its partners would be rolling out routine fee adjustments.

In particular, the new plan would charge merchants higher rates if they chose not to use Visa's tokenization technology than if they opted in to the service, the documents cited by Bloomberg showed. Sources told Bloomberg that this announcement is what revived the DoJ's interest in tokenization.

The report comes after Visa peer Mastercard (NYSE:MA) reached a settlement in December with the Federal Trade Commission over its tokenization practices. Mastercard was alleged to have used the technology to prevent merchants from using alternate payment networks. It ultimately agreed to grant these alternate networks access to customers' personal account details.