Visa, MasterCard Settle Antitrust Suit

A federal judge today approved a settlement of antitrust charges against Visa and Mastercard that either will or won't increase competition among credit card issuers, depending on who you talk to.

U.S. District Judge Nicholas G. Garufis said he found the "public interest is best served by approving the proposed final judgement." But American Express, which is not a party to the settlement, said the settlement will allow Visa and Mastercard to "pay merchants to discriminate against American Express."

But American Express said the settlement will create less, not more, competition.

All three credit card issuers had been sued by the U.S. Justice Department and 18 states, claiming that the rules the issuers had in place prohibited retailers from steering customers to lower-cost payment options.

The rules also prohibited merchants from telling customers about the transaction fees charged to the merchant by the credit card companies.

Under the settlement, Visa and MasterCard are required to allow merchants to offer discounts to customers who pay with other credit cards that charge lower merchant fees as well as to customers that pay with cash or other alternative payment forms.

Comments submitted to the Court from trade groups, retailers associations and individual merchants were "overwhelmingly positive if not enthusiastic" in support of the settlement, Judge Garufis noted.