U.S. sues AmEx, Visa, MasterCard, latter two settle

[ProSense]

U.S. sues AmEx, Visa, MasterCard, latter two settle

By Maria Aspan and Diane Bartz

WASHINGTON/NEW YORK (Reuters) – The U.S. Justice Department sued American Express Co, Visa Inc and MasterCard Inc on Monday, accusing them of violating antitrust laws and citing rules that prevented merchants from encouraging consumers to use cheaper credit cards.

Simultaneously, the Justice Department settled with Visa and MasterCard, which agreed to allow merchants to offer discounts to consumers who use less expensive types of credit or debit cards. The companies said the settlement, subject to court approval, did not involve any payment.

The lawsuit has the potential to cut into a significant source of profits for American Express and threatens to reshape the competitive landscape of the card processing business.

Shares of American Express, which charges merchants more on average for processing credit card transactions than its rivals, closed down 6.5 percent at $39.05.

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[Gman]

1. Many merchants don't take Amex because the fees are too high to justify

when your margin is small to begin with, Amex can eat up your entire profit on a transaction.

[Mimosa]

2. Amex is all we use

Partner and I used to get freaked out by those monster rising rate tricks pulled by Mastercard and visa. They's start out reasonable then work up to 24-27% .