Visa and Mastercard Settle Over Merchant Fee Disclosure

Jill Schlesinger discusses the settlement between the Justice Department and two of the major credit companies over disclosure of fees charged to merchants, and how this can benefit consumers.

CBS Visa and Mastercard Settle Over Merchant Fee Disclosure Maurice Dubois: The Justice Department has a new deal with two out of three major credit card issuers and that settlement could lead to discounts for consumers. Mary Calvi: Joining us now is Jill Schlesinger Editor-At-Large at CBS MoneyWatch.com so this all began with a lawsuit the government filed against these credit card companies. Jill Schlesinger: Absolutely and here’s what they are saying. They are saying you guys are anti competitive. You have violated antitrust rules because you will not allow retailers to disclose how much the credit card companies are charging. These are called merchant fees. They’re not small two to 5% of the value of your purchase as up to 35 Billion bucks a year by the way and with the retailers have said is well you know if we can disclose that we can allow consumers to pay less money depending on the card they use so retailers really fought it. Visa MasterCard settled American Express is holding its nose and trying to fight it. Maurice: Wow well their whole business is sort of built on that isn’t it? Jill: Yes it is. Maurice: On these fees. Jill: These are big— this is a big deal and you know frankly what has been interesting is that it could really help consumers. You know think about it if you knew that you could use one card versus the other card and save money. I mean 3%, 2% that’s what adds up over time that would really benefit you but American Express is fighting this just because of that reason they rely on these fees and American express stocked down 6-1/2 percent on this news yesterday so you know that people are very worried about how American express might make that money up if they don’t go along with us. Mary: And worry that consumers actually use cash. Jill: Oh my gosh cash, that’s unheard of. Maurice: What is that? Jill: What’s that? Maurice: Okay wow, alright, what do you predict this going ultimately? Jill: Well you know these and Master Card had settled it’s a done deal and now as soon as the courts approve it that will go into effect in two months. I’m thinking American Express is going to have to go along with this because really it cost a lot of money to fight the Justice Department remember, they can print money to pay their legal fees. The lease companies can’t I think American Express is looking for a little wiggle room in a settlement but again really good for consumers. We can save a couple of percent and we’ll take it right? Mary: Sure. Maurice: Why not? Mary: Jill thanks. Maurice: Cash. Jill: Yeah right.