NEW YORK – A federal judge this afternoon approved a settlement between the Justice Department and Visa and MasterCard that bars the two networks from enforcing anti-steering bylaws against merchants steering business to cheaper forms of payment.
American Express has refused to settle with the government, vowing to wage a multiyear fight on the grounds that the deal would promote steering customers from one payment network to another without enhancing competition.
The agreement settles claims brought by the Justice Department in an Oct. 4 suit charging the three card networks with illegally preventing competition by limiting the kinds of discounts merchants can offer.
Under the settlement, the nation's two largest processing networks agreed that the contracts they sign with retailers will not prohibit stores from offering customer discounts or rebates for using a specific kind of credit card, like a rewards card. The fees that the networks and banks charge retailers for handling purchases made with rewards, cash-back cards and high-end cards with gold, platinum or black designations are often higher than the fees for simpler cards with no rewards. It also says merchants may inform customers about their costs for handling different types of cards.
The lawsuit maintained the networks made it hard for merchants to promote the use of competing cards with lower fees. Joining the lawsuit were state attorneys general from Arizona, Connecticut, Idaho, Iowa, Maryland, Michigan, Missouri, Montana, Nebraska, New Hampshire, Ohio, Rhode Island, Tennessee, Texas, Utah and Vermont.
