The Supreme Court sided today with American Express in a 5-4 ruling, allowing Amex to retain a clause in their contract with retailers to prohibit them from ‘steering’ a customer away from an Amex card to a Visa or Mastercard. Justices Roberts, Kennedy, Alito, and Gorsuch joined Justice Thomas in the majority opinion.
PDF of the decision can be found here.
American Express has traditionally charged businesses more in swipe fees than do Visa or Mastercard (though they’ve been getting more competitive on the fees recently), ostensibly to help fund their richer rewards programs. Because of that, some retail shops might attempt to steer customers away from using Amex. To combat this, Amex has a provision in the agreement requiring businesses who accept their payments to avoid this steering practice.
More than a dozen states brought the lawsuit against American Express for this policy claiming it violated anti-trust laws. The conservative judges ruled in favor of American Express stating that the Amex policy has not been demonstrated to be stifling competition.
Justice Breyer wrote a dissent with the opinion that American Express’s card consumer-faced card issuing business is separate from their payment network business, and that the burden of the cost required from the consumer end can not affect their payment network business with it’s swipe fees.
For most of us in the miles-and-points hobby this decision is a positive one since we don’t own retail businesses but we do use Amex cards with rewards, and we want Amex to keep up those reward levels which possibly could have lessened a bit in the long run had they lost the case.
On a broader point, WSJ notes that this decision is a setback for the merchants’ broader ambitions to take on credit card swipe-fees, and enforce limits similar to those of debit cards. If such legislation is ever passed, it would obviously decimate the credit card rewards programs.
