Finally the long await settlement between the Justice Department and credit card bigwigs Visa and MasterCard is finally round the corner. Based on the settlement reached, these two financial majors will give permission to the merchants to disclose the interchange fees to the consumers during the time of payment if they choose to pay using their credit cards. The merchants will also be given the leverage to ask consumers to pay using cards that charge lesser fees as compared to the certain credit cards.
This breakthrough settlement is bound to have a positive impact on the consumers and merchants alike since it will eliminate unnecessary charges that were being pocketed by the credit card lenders. The Justice Department conducted a probe to find out the details about the charges being levied by the credit card lenders on merchants for purchases being made using credit cards. During the course of the investigation, the Justice Department also unveiled the fact that the merchants were not given permission to let the customer know about the various charges and fees being levied on them by the banks. They were also forbidden from telling their clients to purchase their products or services using other cheaper options. This led to unrest among the merchants who have been complaining about this practice for a long time now.
Putting an end to their long pending woes, MasterCard and Visa, on Monday reached a settlement that allowed the traders to request consumers to use other cards that charge lesser fees.
Eric Holder, the Attorney General, attending a press conference that afternoon said that the objective of the Justice Department was to eliminate the anti-competitive rules that were levied by credit card lenders and help consumers save more in the process. The rules that were implemented by the credit card issuers before caused a no-win scenario for the merchants as well as the consumers.
The settlement was reached following complaints lodged by many attorney generals of state and the federal government against credit card lenders who were charging high fees under the name of transaction charges. While Visa and MasterCard have agreed to sign the agreement papers, another major credit card lender, American Express refrained from doing so.
For a number of years, merchants have been complaining that the 5% fee charged by the banks for each transaction is eating into their profits, sometimes not even allowing them to make profits. With the new settlement coming into play, the complaints should not stop coming.