Stung by the loss of the Costco co-branded credit card program, the recent loss of a recent DOJ lawsuit, and the potential of rising consumer interest rates, American Express’ (AXP) Asset-Backed Securities (ABS) credit card program should strong in 2015 given its liquidity profile.
American Express lost a major court decision over its rules that prohibit merchants from telling customers they prefer to accept one card over another. AmEx previously said if the lose the case it will materially affect their business.
American Express agreed to settle two putative antitrust class actions filed by U.S. merchants that challenged the company’s Card acceptance agreements. The settlement agreement will address certain merchant concerns, while helping to ensure that American Express Card Members are treated fairly at the point of sale. It will also limit the Company’s exposure to future…
American Express agreed to settle two putative antitrust class actions filed by U.S. merchants that challenged the company’s Card acceptance agreements. The settlement agreement will address certain merchant concerns, while helping to ensure that American Express Card Members are treated fairly at the point of sale. It will also limit the Company’s exposure to future legal claims. The first lawsuit, In re American Express Anti-Steering Rules Antitrust Litigation, challenges the Non-Discrimination Provisions in the company’s merchant contracts. The lawsuit dates back to 2006 and is pending in the U.S. District Court for the Eastern District of New York. The second lawsuit, In re Marcus Corporation, challenges American Express’ Honor All Cards Provisions. This lawsuit dates back to 2004 and is pending in the U.S. District Court for the Southern District of New York. American Express will reimburse the class plaintiffs’ costs of notifying merchants of the settlement up to $2 million and will provide an additional $2 million fund for plaintiffs to communicate to merchants about the terms of the settlement.
A federal judge Wednesday in New York approved a settlement between the Justice Department and MasterCard and Visa involving allegations the networks were prohibiting merchants from “steering” consumers toward use of lower-cost payment instruments. These allegedly included having barred discussion with costumers of card transaction fees for merchant. Court papers documenting the settlement process with the U.S. government and 17 states show neither Visa nor MasterCard confirmed or refuted the allegations.
In order to deliver the most rewarding and effective roaming experience to clients while increasing its network efficiency, Bell Mobility has again turned to Giesecke & Devrient (G&D) – a leading developer of SIM and Mobile Device Management (MDM) software for wireless service providers. G&D has supplied its SmartRoam™ platform to Bell Mobility to work in concert with other network roaming elements for a centralized Outbound Roaming Solution (ORS). That is possible due to the G&D software which creates and optimizes Over-the-Air (OTA) updates based on SIM-card and client characteristics. SmartRoam helps wireless operators such as Bell Mobility reduce related expenses and ultimately drive down operating expenditures. G&D’s patented technology enables OTA provisioning of roaming preferences and SIM ToolKit commands based on real-time events received from the network.
American Express confirmed it has received a “Civil
Investigative Demand” from the DOJ on October 10th regarding its
policies relating to merchant surcharging and its “anti-steering”
policies that prohibit merchants from discriminating against an AmEx
card in favor of other forms of payment. In June, five separate lawsuits
were filed against AmEx by Rite-Aid, CVS Pharmacy, Walgreen, Bi-Lo, and
H.E. Butt Grocery Company, which alleged that AmEx’s “anti-steering”
rules in its merchant acceptance agreements violate federal antitrust
laws. The five plaintiffs assert that their lawsuits are related to the
“Payment Interchange Fee and Merchant Discount Antitrust Litigation”
filed against Visa, MasterCard in 2005. AmEx was not a party
to the “Interchange Litigation.” AmEx has until January to respond.
The average merchant service fee charged by Bankcard, MasterCard
and VISA in the second quarter was 92 basis points, down from 99 basis points a year ago, and from 140 basis points immediately prior to the interchange reforms. Since the reforms came into effect, the average merchant service fee charged by American Express has fallen by around 15 to 20 basis points to 2.36%, while the average fee charged by Diners Club has fallen by around five basis points to 2.31%. The Reserve Bank of Australia has released its first quarterly report on average merchant service fees and market shares. The RBA says the smaller declines by American Express and Diners Club has raised the premium that merchants pay to accept these cards. The RBA’s liaison with merchants suggests that while some merchants have been able to negotiate reductions in the fees charged by American Express and Diners Club, many others have not been able to do so. In some cases, merchants have indicated that they have little choice but to accept these cards, and find it difficult to surcharge. Some have also indicated that they would like to be able to steer customers to cheaper forms of payment but were prevented from doing so by clauses in their contracts with American Express. Over the past year, the RBA discussed this issue with American Express and, as a result, American Express has recently written to all its merchants informing them of the removal of the “anti-steering” clauses from its contracts.
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[1]: http://www.cardweb.com/cfi/