Justice Dept. says Visa and MasterCard can no longer block store discounts for lower-fee cards
Home Accents Today Staff -- Home Accents Today, 10/4/2010 4:56:55 PM
WASHINGTON, Oct. 4, 2010 -- The Justice Department today announced that it has reached a settlement with Visa and MasterCard on practices involving the interchange or "swipe" fees charged to merchants to process credit and debit card transactions. The agency also announced that it had filed a lawsuit against American Express, which declined to join the settlement.
The National Retail Federation welcomed today's announcement as the practices have blocked retailers from offering discounts or other incentives to retail customers who pay by cash, check or types of credit cards that cost merchants less to accept than other cards.
Federal law allows retailers to give customers a discount for cash or credit, but card industry rules have made it difficult to do so in practice. Card companies have also blocked merchants from giving a discount to customers who use debit cards or who use lower-fee credit cards, such as a "plain vanilla" card that might carry a fee of about 1.5 percent rather than a premium rewards card that might carry a fee of 3 percent.
In today's settlement filed in U.S. District Court in New York, Visa and MasterCard agreed to abandon rules or practices that interfere with discounts for cash, checks, debit or cheaper forms of credit cards. Visa and MasterCard also agreed not to interfere with merchants who offer a discount for card brands that carry lower fees that Visa and MasterCard.
"The retail industry is very pleased that the Department of Justice is taking action against the anticompetitive practices of the big credit card companies," NRF Senior Vice President and General Counsel Mallory Duncan said. "Allowing merchants to offer a discount for lower-cost forms of payment will begin to inject competition into the credit card market, a step that the card companies have resisted for far too long. Credit cards are still going to be welcome in retail stores, but consumers are going to flock to the cards that give them the biggest discount."
The settlement goes beyond provisions included in the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law this summer. A provision in that legislation prohibited card companies from interfering with discounts for cash, check or debit cards, but did not address lower-fee credit cards or credit card brands with lower fees.
Read the NRF's report here: www.nrf.com/modules.php?name=News&op=viewlive&sp_id=1011
Discounts for cash have always been an option - what further benefit does this ruling provide? Minimum purchases requirements and service charges are still disallowed;how does this ruling benefit the retailer's bottom line?
Tobi Zenker Ahlquist - 2010-10-05 10:37:06 EDTGreat!
Now, if we could only get the "foreign transaction fees" to go away too. Fee for what? The computer systems do all the work...
Krister Hard af Segerstad - 2010-10-05 10:37:00 EDT
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