June 26, 2018
The U.S. Supreme Court yesterday ruled that American Express can prohibit its merchants from steering their customers to lower-cost payment cards. At issue is a policy Amex requires of merchants that agree to accept its cards: they cannot try to persuade customers to use another card at the point of sale.
The battle between merchants on one side and card networks and issuers on the other over fees and policies around payment card acceptance ebbs and flows. Usually, Visa and Mastercard are front and center when these matters go to court, but this time, American Express was the defendant. The state of Ohio, joined by 10 others contended that Amex’s antisteering policy violated federal antitrust rules. The court ruled 5-4 that it does not.
The majority said the plaintiffs could not prove that Amex’s higher fees led to a non-competitive market nor that the antisteering policy stifled competition among credit card companies. Retailers, of course, were disappointed at the ruling.
“By denying merchants the right to simply ask for another card or offer an incentive for using a preferred card, the Supreme Court has undermined the principle of free markets where one company should not be allowed to dictate the practices of an entire industry in order to protect its business model,” said Stephanie Martz, senior vice president and general counsel for the National Retail Federation. “This misguided decision represents a missed opportunity to take a stand in favor of free markets and bring soaring credit card fees under control.”