The ATM Industry Association (ATMIA) yesterday praised the U.S. Justice Department and seven states that have sued Visa, MasterCard and American Express for alleged anticompetitive practices involving credit and charge cards.
The Justice Department, Connecticut, Iowa, Maryland, Michigan, Missouri, Ohio and Texas alleged in an Oct. 4 U.S. District Court filing that Visa, MasterCard and American Express "suppressed competition with rival networks" in violation of Section 1 of the Sherman Antitrust Act.
Government lawyers said the card networks' practices affected merchants, resulting in higher prices for consumers. Federal officials alleged that American Express, Visa and MasterCard maintain rules, prohibiting merchants from offering discounts or other incentives to consumers in order to encourage them to pay with credit or debit cards that cost merchants less to accept at the point of sale.
Similar restrictions on ATM networks have had a negative impact on non-bank ATM deployers, inhibiting their ability to provide consumers with additional convenient access to cash in predominately off-branch locations, ATMIA said. As ATM competition is reduced as a result of these restrictions, consumers will face a corresponding decrease in choice and convenience at the nation's ATMs, the association said.
Mike Lee, CEO of ATMIA, supported the lawsuit, which was filed in the U.S. District Court for the Eastern District of New York.
"The ATM Industry Association is pleased that the Department of Justice and these seven states have intervened to curtail anticompetitive practices in order to enhance competition among the networks and thus lower costs for both merchants and consumers," Lee said.
The Justice Department also announced a proposed settlement with Visa and MasterCard. If approved by the district court, Visa and MasterCard would allow merchants to offer discounts, incentives and information to consumers to encourage use of payment methods that are less costly. American Express did not participate in the proposed agreement.
Lee said, however, there are other anticompetitive network restrictions that affect debit and prepaid cards used at ATMs that are not covered by the lawsuit or the proposed settlement. He noted that the network prohibition against surcharging of international cardholders, restrictions on differential surcharging and tiered interchange rates favor bank-owned ATMs.
ATMIA, which represents owners of approximately half of the total installed base of ATMs in the United States, will continue to work with the states and the Department of Justice to pursue "a resolution of these industry restrictions to stop erosion of ATM competition in this country," Lee said.
