According to a ruling by a Federal judge the American Express Co. violated the United Sates anti-trust law.

According to a ruling by a Federal judge the American Express Co. violated the United Sates anti-trust law. According to a ruling on Thursday by a Federal judge, the American Express violated the US anti-trust law, by barring the sellers from informing the consumers about using other credit cards which have lower processing fees.

According to the judge the long-lasting practice by the American express to use the consumers other form of payments which is cheaper than their processing fees is against the anti-trust law. It was said that the charges for companies like Visa, MasterCard, Discover and other credit card companies are much lower than the American Express. But American Express prohibits merchants who had taken their service to encourage any other form of payments with low cost cards. American Express said they will appeal against the verdict.

In his ruling on Thursday Judge Nicholas Garaufis said, the American Express`s non-disclosure policy harms the competition and prevents merchants from trying credit cards with lower processing fees.  According to market experts, the center of this case was the fees that merchants pay to process credit or debit cards. Up to now these costs were hidden from the consumers, which is the major cost for any merchant who wants to accept cards. It has been reported that every time a transaction takes place by a debit or credit card banks and payment networks take a small share of percentage from the transaction as a fee.

The cost differs from card to card but debit card transaction are always cheaper. It was said the offers like points or airline miles from AmEx is the most expensive one for the merchants to process. It was said that though consumers directly don’t pay the fees, merchants cover the costs by selling their goods on a higher price.

In an interview Jeffrey Shinder, an Antitrust and Payments expert at the law firm Constantine Cannon said, “Every day merchants make their vendors compete for their business and, hopefully, drive down prices. That type of competition does not exist at all in the payment industry”. Constantine Cannon was involved in several antitrust lawsuit against AmEx.

In a statement American Express said, the decision was wrong. By referring to Visa and MasterCard they added, “The court’s ruling will not provide any benefit to consumers and will, in fact, harm competition by further entrenching the two dominant networks”.

But retailers had welcomed the ruling. In a statement Mallory Duncan, general counsel for the National Retail Federation said, “This is a pretty important step forward, and it vindicates what we’ve said all along: that the credit card market is broken and the consequence has been high fees for merchants and consumers”.