Thaindian News

October 5, 2010 (Pen Men at Work): recent reports suggest that the US Justice Department has sued American Express, MasterCard and Visa with an antitrust lawsuit in the U.S. District Court on behalf of the Eastern District of New York. The lawsuit was aimed to challenge the anticompetitive rules of the three credit card providers. Apparently, the credit card providers increase the merchant’s cost of doing business and thereby deprive the customers from availing lucrative deals.

The states of Connecticut, Iowa, Maryland, Michigan, Ohio and Texas joined the US Justice Department in the lawsuit. Meanwhile the justice department revealed that they have reached a settlement with Visa and MasterCard. The new arrangement will provide the Merchants the opportunity to offer discounts, incentives and information to the consumers. The new system will result in more savings for the customers. The new ruling is more than likely to encourage the consumers to pay with credit cards that will cost less for the merchants to accept.

Attorney General Eric Holder said that the new ruling suggests that the U.S. Government will no longer tolerate anti-competitive practices. The justice department wants to put more money into the consumer’s pocket and this is the best way to achieve that end.

Right now the total credit cards acceptance cost for U.S merchants amounts to $35billion each year and that money is collected from the merchants every time a card is swiped. The proposed settlement will allow the merchants to provide a free or discounted product for purchasing with a particular card network. Now merchants will be able to promote their own card networks.

Right now American Express has not yielded to the terms and until the time comes, merchants and consumers will not be able to benefit from the new ruling.