Record-Breaking Results for AMEX
Record-Breaking Results For AMEX As It Maintains Its Illegal Merchant Fees In Europe.
AMEX released its results for Q2 in July which show that its interest income has grown nearly 80% in just four years, since around the time Visa and Mastercard fees were capped in the EU. This means that merchants are enabling ever greater profits for the company as it continues to pivot from charge cards, where cardholders are required to pay the balance in full each month, to a provider of credit.
However, merchant fees on AMEX are still, on average, around 2.40%, many times higher than the 0.20% or 0.30% interchange fees merchants pay on Visa and Mastercard. This is despite a European Court of Justice ruling last year that a significant portion of AMEX transactions, if not all, should be subject to the same caps.
The ruling confirmed that, where AMEX exists as a four-party scheme because a third party is involved in either the issuing (think the British Airways co-branded card) or acquiring (think Elavon doing all the acquiring for AMEX in Ireland), then its fees should also be capped at 0.30%.
At the time of the judgment, many commentators expected co-branded AMEX cards such as the British Airways card to cease to exist, at least in their current form. However, such cards are still being issued and their use is widespread. Upon a close look at AMEX’s merchant contract and you’ll find the following clause: “Although American Express does not have fees payable between acquirers and issuers… [we] will not pay net compensation to the card issuer of more than 0.30% for credit cards and 0.20% for debit cards”.
We don’t believe that this line gets them off the hook. The regulation was intended to reduce the fees merchants pay to accept cards so that they can reduce consumer prices. The ECJ ruling shows that they are breaching the law and merchants are still getting a raw deal.
At Bankhawk we are helping merchants to negotiate fairer fees and are working with regulators to make sure that the card companies cannot continue to flout their statutory duty with excessive fees and restrictive business practices.