The Justice Department, on Monday, revealed the settlement reached between them and the credit card majors in the civil lawsuit that was filed against the latter. The lawsuit claimed that some of the leading credit card companies levied anti-competitive rules on merchants, charging them high "swipe fees" for the transactions made using credit cards and also preventing them from requesting the customers to use options that cost less fees. MasterCard and Visa, the two major players in the credit card sector, have given their approval for the settlement, while another major player, American Express, continues to face the lawsuit since this bank is not willing to accept the terms of the settlement. There are a number of interesting facts about the settlement that makes it acceptable to most banks and merchants.
Retailers and Discover stand to win
Discover is another player in the credit card sector, but not as big as the three banks facing the lawsuit. Once the settlement has been reached, Discover has chances of expanding its share in the market, thereby increasing its profits.
The merchants, who have fought tooth and nail to win this case, will obviously merge winners. According to the terms of the settlement reached with the banks, the merchants can let the consumers know the fees for using credit cards for payments and also give them an option to opt for modes of payment with lower fees. In fact, merchants can also offer discounts to consumers who are willing to use cards with low fees associated to it and incentives to those shopping using cash.
Cash not the objective
It is important to note that the issue under discussion does not involve the debate between credit cards and cash. The terms of the settlement is a fall over of the continual battle between the credit card companies and the merchants who have been at loggerheads with each other because of certain clauses stipulated by the lenders.
Following the huge outcry from the merchants, Senator Dick Durbin proposed a few changes to the recent financial bill which did see the light of the day. This settlement is just an on-going way of ensuring the credit card sector is fair to merchants, as well as consumers.
With Visa and MasterCard giving their consent, it is only American Express that has to solely bear the brunt of the on-going investigation by the Justice Department, thus putting it under the scanner.