Consumers relying more on their MasterCard for credit and debit purchases helped the second largest payments processor see a net income of $514 million, or $4.03 a share, in the fourth quarter of 2011 – that’s a 23.7 percent jump in profit over a year ago.

Visa and MasterCard have agreed to allow merchants to encourage customers to use lower cost credit or debit cards — and potentially provide rebates or discounts for doing so — under a settlement with the U.S. Justice Department announced today. Simultaneously, Justice officials said that an antitrust lawsuit would proceed against a third payment network, American Express, challenging rules that prevent merchants from offering consumers “any cost saving options, such as discounts or rewards, for using less expensive forms of payment.”

Visa Inc., the top credit and debit card payment network, posted its third-quarters profit at $716 million, or 97 cents a share, slipping 2 percent compared to a year ago but beating Wall Street estimates. For its quarter ended June 30, the transactions processing giant exceeded analysts’ expectations of 93 cents per share.

Retailers large and small are closer to a years-long goal of lower “interchange fees” – the per-transaction cost charged by banks on the MasterCard and Visa debit cards used by customers. But under a new compromise, the network card giants got a break by dodging regulation now directed at major banks that issue the debit cards, including Bank of America, JPMorgan Chase, Citigroup and Capital One.

Beginning June 1, credit and debit card processors must have “reasonably designed policies and procedures” in place to detect if U.S. transactions are tied to bets placed with Internet gambling sites, according to a finalized rule by the Federal Reserve. But the intended crackdown on U.S. online wagering that was behind the 2006 law taking effect tomorrow is far from certain as its power to enforce such activity remains vague.