Merchants Can Encourage Using non-AmEx Cards, Court Rules

Bloomberg reports that American Express lost it’s case of barring businesses from encouraging the use of Visa or Mastercard as a means of lowering fees, in the latest of a string of blows to the credit card company, after losing Costco and jetBlue as credit card partners.

The Justice Department brought the suit against American Express as a way of giving merchants the ability to cut costs, and not be bound to the higher fees charged by the card issuer. AmEx for their part insists that this violates antitrust laws and stifles competition.

Judge Garaufis ruled, AmEx has “the power to repeatedly and profitably raise” its merchant prices “without worrying about significant merchant attrition. The result is an absence of price competition among American Express and its rival networks.”

The company countered in a statement:

The court’s ruling will not provide any benefit to consumers and will, in fact, harm competition by further entrenching the two dominant networks.

American Express intends to appeal the ruling.

The decision also impacts merchants who want to offer discounts to consumers who use other lower cost payment methods, something American Express forbids in their merchant agreements, while Visa and Mastercard permit to a larger extent.