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by Robb Mandelbaum

Last summer, the Senate, while debating what eventually became the Dodd-Frank Wall Street Reform and Consumer Protection Act, took a stab at reining in fees for debit and credit cards. The amendment, proposed by Illinois Democratic Senator Dick Durbin, would have ended the card networks’ practice of preventing merchants from using incentives to steer customers toward other credit cards and credit card brands. When the bill reached the president’s desk, however, that provision had been replaced by one that allows merchants to offer discounts only for certain forms of payment.

More recently, the Justice Department finished the job Congress couldn’t do. Or at least that’s what Attorney General Eric Holder seemed to suggest when he announced an antitrust lawsuit against the credit card companies and a simultaneous settlement between the government and Visa and MasterCard that embraced the principle rejected by Congress. “With today’s lawsuit we are sending a clear message: We will not tolerate anti-competitive practices,” Mr. Holder said in a statement earlier this month. “We want to put more money in consumers’ pockets, and by eliminating credit card companies’ anti-competitive rules, we will accomplish that.” But merchant and consumer advocates and a card industry observer caution that little is likely to change at the cash register, at least in the near future.

The settlement forces Visa and MasterCard to rewrite portions of their contracts with merchants that now limit merchant efforts to promote other cards with lower transaction fees or cards from other networks. (Fees on Visa cards, for example, are typically about 2 percent.) In statements, both Visa and MasterCard insisted the settlement was no big deal. “Our discounting practices have long been more flexible than our major competitors’ and have permitted merchants to discount for cash, checks, debit cards or other payment brands,” said MasterCard general counsel Noah J. Hanft in the statement.

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