Discover: Antitrust suit won't help consumers

U.S. consumers aren't likely to benefit from an antitrust settlement that lets merchants offer rewards and incentives to people who pay with lower-cost credit cards, according to Discover Financial Services.

“The merchants don't want to train clerks to do anything other than what is core to their business,” said Diane Offereins, president of payment systems for the Riverwoods-based company, in an interview today. “They don't want people dallying in line having conversations over what they're going to pull out of their wallets.”

Visa Inc. and MasterCard Inc., the world's biggest payments networks, settled the lawsuit filed earlier this week by the U.S. Justice Department. The companies agreed to lift rules that barred merchants from steering customers to alternative forms of payment. American Express Co., the No. 3 network, has vowed to fight the lawsuit. Discover, the fourth-biggest network, wasn't named a defendant.

The limited scope of the lawsuit was a setback for merchants because payments networks will be allowed to keep rules that bar merchants from surcharging consumers who use credit cards, Offereins said.

“It really was about surcharging, and the merchants were fighting very hard for it,” Offereins said. “What you got was something that took another issue and made it the focal point and left the elephant in the room off to the side.”

Retail and consumer groups including the National Federation of Retailers and the Retail Industry Leaders Association said the settlement was a long-awaited victory. Attorney General Eric Holder said it would benefit consumers.

“We want to put money in consumers' pockets,” Holder said at an Oct. 4 news conference announcing the settlement. “By eliminating credit-card companies' anticompetitive rules, we will accomplish that.”

Discover fell 22 cents, or 1.3 percent, to $16.78 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have climbed 14 percent this year.