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National Restaurant Association - Restaurateurs can promote various credit cards

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Restaurateurs can promote various credit cards

Restaurants and other merchants can now encourage customers to use credit cards other than American Express, a panel of judges said.

A three-judge panel refused June 16 to halt a February court decision that found American Express violated federal antitrust laws by not permitting merchants to promote the use of other cards. American Express has appealed the February decision.

As the company’s appeal proceeds, restaurateurs are now free to influence customer card choices through tactics such as:

  • Offering discounts and other incentives to encourage customers to use a different, less-expensive payment method
  • Telling customers verbally which payment cards they prefer to accept
  • Writing and putting up signage suggesting preferred cards of choice
  • Posting information promoting other payment choices
  • Telling customers about the relative costs of accepting particular cards.

Denying American Express’s request to put the earlier ruling on hold gives the more than 3 million restaurants and retail shops that currently accept the American Express card the ability to encourage customers to use competitive brands, like Visa, MasterCard and Discover, which generally have lower interchange rates.

American Express said it was “disappointed the request was denied.”

Laura Knapp Chadwick, the National Restaurant Association’s director of commerce and entrepreneurship, said the decision was a victory for restaurateurs and merchants, who have been fighting for years to ensure that transaction fees stay reasonable to their processing costs.

“The NRA has advocated for competitive interchange rates for years, so this decision is a big first step,” she said. “As a result, we may see card brands actively compete with each other for restaurants’ business by lowering costs, which can only help a restaurant’s bottom line.”

The ruling was the latest in a series of legal maneuvers that started in 2010 when the Department of Justice and 17 attorneys general filed suit against Visa, MasterCard, American Express and Discover for anticompetitive practices. All but American Express negotiated a settlement.

In February, the United States District Court Eastern District of New York ruled that American Express violated federal antitrust laws by blocking merchants from steering customers toward using other cards. The company’s appeal will be heard in November.

Restaurateurs and other business operators were allowed to start promoting the use of other credit cards on July 1. But they cannot surcharge customers who use their American Express cards or disparage or mischaracterize the brand by making untrue statements about it.

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