Visa and MasterCard, seven state attorneys general, and the Department of Justice agreed to settle an antitrust lawsuit today. American Express says it will challenge it.
According to Visa, "as part of the settlement, Visa will allow U.S. merchants to offer discounts or other incentives to steer customers to a particular form of payment including to a specific network brand or to any card product, such as a "non-reward" Visa credit card.
MasterCard says "the terms of the settlement are consistent with the Company's long standing business practices and will require MasterCard only to modify its rules to more specifically conform to its business practices."
In a statement, American Express said "the antitrust lawsuit filed today against the company is a significant retreat from previous Department of Justice efforts to promote competition in the payment industry."
The new approach would ultimately limit consumer choice, reduce competition and curtail innovation.
At a news conference today, Attorney General Eric Holder explained that "every time a consumer uses one of their credit cards to buy something from a merchant, that merchant pays a fee -- a fee that is passed on to consumers through higher prices."
In 2009 alone, the three credit card companies and their affiliate banks collected more than $35 billion in these fees.
He went on to say that "Visa, MasterCard and American Express don’t just impose fees, however -- they also prevent merchants from offering consumers any cost saving options such as discounts or rewards for using less expensive forms of payment."
The companies put merchants and consumers in a no-win situation: accept our card, pay our fees, and don’t even think about trying to get a discount.
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