The Supreme Court voted 5-4 in favor of American Express for their policy of preventing retailers from offering customers incentives to pay with cheaper cards. This is a major victory for the company that its business model.
The case was brought on by more than a dozen states and the Justice Department, which challenged American Express’ policy that prohibited retailers and other businesses from offering consumers discounts or incentives to pay with cheaper cards. The decision means merchants that accept AmEx cards won’t be able to ask customers to use other cards for purchases.
Merchants incur swipe fees when customers pay with a card. American Express has always charged higher swipe fees than its competitors with the reasoning that Amex customers spend more compared to other credit card network users. These fees are a primary source of revenue for American Express. “Amex’s business model has spurred robust interbrand competition and has increased the quality and quantity of credit-card transactions,” Justice Thomas wrote for the majority.
WSJ reports that AmEx in recent years has been lowering its fees somewhat, in particular for small businesses, as it works to get more merchants to accept its cards. Some 9 million U.S. locations accepted AmEx cards as of 2017, up from 6.4 million in 2013, according to the Nilson Report, which says that roughly 10.9 million accept Visa and Mastercard.