As part of the deal, the nation’s two largest processing networks agreed that the contracts they sign with retailers will not prohibit stores from offering customer discounts or rebates for using a specific kind of credit card, like a rewards card. The fees that the networks and banks charge retailers for handling purchases made with rewards, cash-back cards and high-end cards with gold, platinum or black designations are often higher than the fees for simpler cards with no rewards. It also says merchants may inform customers about their costs for handling different types of cards.
In general, merchants had been previously allowed to offer discounts for cash. However, the removal of anti-steering rules may have the biggest impact.
The lawsuit maintained that the networks made it hard for merchants to promote the use of competing cards with lower fees. Joining the lawsuit were state attorneys general from Arizona, Connecticut, Idaho, Iowa, Maryland, Michigan, Missouri, Montana, Nebraska, New Hampshire, Ohio, Rhode Island, Tennessee, Texas, Utah and Vermont.
A MasterCard spokesman said in a statement that the terms of the settlement are “consistent with company practice to allow merchants to offer a discount for cash and other forms of payment, including competing card brands.”
Arriving on the heels of the Durbin Amendment rules establishing reduced merchant costs for debit cards, merchants will now have a freer rein to promote their chosen payment types under this ruling. Merchant programs to steer consumer choice between signature and PIN debit transactions have proven very effective in the past.