On Monday the Justice Department announced a settlement with Visa and Mastercard over the fees they charge merchants for accepting their cards. It also filed suit against American Express after failing to reach a settlement with that company.
As we noted recently, the previous rules prevented merchants from treating higher-cost cards differently. They couldn’t refuse to take high-fee cards (they either had to accept all Visa cards or none, for example). They couldn’t encourage customers to use low-fee cards. They couldn’t charge more for purchases made with high-fee cards. They couldn’t even charge less for purchases made with low-fee cards.
ATM owners face a similar situation: Visa, Mastercard and American Express pay a small fee when their cardholders use an ATM. (They also sometimes charge a fee as well). But rules imposed by the card-issuers prevented merchants from charging a lower surcharge for withdrawals made with lower-fee cards. That left merchants with only bad choices when a card-issuer raised their fees: Absorb the expense, raise the surcharge for all users, or shut down the machine.
It’s unclear how the settlement will affect ATM transactions. And there will be a technological hurdle: most ATMs in use today are not equipped to charge different surcharges for different cards. But this is clearly a step in the right direction, and a victory for consumers and small businesses.
