How would you feel as a Texas consumer if you wanted to use a particular credit card at a store but were constrained from doing so because another card issuer forbade the merchant from accepting the card?
And how would you feel upon learning that the card company imposing terms was slapping a comparatively higher transaction fee on the merchant for using its card, resulting in higher costs being passed along to you and other consumers?
It’s pretty clear how you, along with all other prudent consumers, would react to that state of affairs.
Specifically, you would respond in the same manner that a federal judge recently did, when he excoriated AmEx for so-called “anti-steering” activities that barred merchants using its card from recommending lower-cost alternatives to customers.
Those actions “imposed actual, concrete harms on competition,” noted the court, owing to the fact that they excluded consumer choice and militated against lower costs being passed along to members of the public.
The judge’s opinion was anything but sparse, with his ruling being delivered in a 150-page decision. Remedies have not yet been determined.
A number of commentators immediately praised the opinion. U.S. Attorney General Eric Holder called it “a triumph for competition and for American consumers.”
High credit card transaction processing fees erode price competition, noted an advocate for convenience stores across the country. He stated that opening up the market to increased competition “helps merchants and consumers, because it can help keep prices down, and spur spending and economic activity.”
Source: Reuters, “American Express card rules violated U.S. antitrust law,” Jonathan Stempel, Feb. 19, 2015