Competition record
American Express
Deep profile · 1 linked library matter
American Express runs a card network between cardholders and the merchants who accept the card. In 2018 the Supreme Court upheld its anti-steering rules in a two-sided credit-card market, and the library records the case as won by the defendant.
Overview
American Express issues cards and signs up the stores, airlines, and other merchants that take them. Cardholders pay annual fees and spend on the card. Merchants pay a discount, the fee Amex charges for the transaction. Rewards on the card are funded largely by that merchant side of the business. The network is two-sided: it needs both the cardholder and the merchant, and the price on one side affects participation on the other.
Amex's merchant rules limited steering. A shop that preferred a lower-cost card was restricted in telling the customer to use that other card. Ohio and other states said those anti-steering rules suppressed competition among card networks. American Express said a rule about steering cannot be judged by looking only at the merchant fee.
In 2018 the Supreme Court agreed with American Express. The Court treated credit-card transactions as a two-sided market and held that the states had not proved harm in that market as a whole. The anti-steering rules stood. The library status is won by the defendant. This library id is amex.
Competition footprint
The merchant discount and the cardholder reward are two prices in one network.
An anti-steering rule keeps a merchant from pushing the customer toward a cheaper network at the till.
The 2018 judgment upheld the rules under the two-sided theory the Court adopted.
Consumer & business angle
Merchants pay the acceptance fee and were the businesses that wanted to steer.
Cardholders see rewards, annual fees, and which shops take the card.
What to watch
- How later payment cases define the market when a platform charges both sides.
- Merchant contract terms that still limit what a cashier may say about a competing card.
Markets
credit card networks · charge cards · merchant card acceptance · credit card network services · merchant acquiring
Also known as: amex, american express