Justice Department has filed a lawsuit against Visa, MasterCard and American Express on Monday
Merchants, who were not permitted from offering discounts and hiking prices for consumers by credit card companies in US, can now take heart. The Justice Department has filed a lawsuit against Visa, MasterCard and American Express on Monday for such anti-competitive practices. While Master card and Visa have decided to settle the charges American Express denied wrongdoing and said it will fight the suit.
It is alleged that these credit card companies have put in place rules that block sellers from offering consumers lower-cost payment options. According to another complaint, the fee is then passed on to consumers in the form of higher prices.
Attorney General Eric Holder believes by eliminating credit card companies’ anticompetitive rules, they will be able to put more money into the consumers pocket. Subject to approval by a federal court, the terms of the settlement, would mean Visa and MasterCard will give merchants more flexibility to offer different, less expensive payment methods to consumers.
While the counsel for Master Card and Visa agreed for an amicable settlement, the chief executive of American Express, Kenneth Chenault, said in a statement that the company has “no intention of settling the case.” He argues that the company will go the extra mile to defend the rights of its card members at the point of sale and our ability to negotiate freely with merchants. Consumer program director Ed Mierzwinski, says the move will finally open competition in the card payment market, which would lead to lower prices to consumers.
Retailers have claimed since long that reducing the costs they incur to accept credit cards will translate to lower costs for consumers. Now that the retailers will be freed from the strangle hold of credit card companies or credit card providers , it remains to be seen whether consumers stand to gain anything or is just used to augment their gains.