After years of policies geared the other way, American Express will no long prohibit merchants who accept their card from steering consumers to their rivals at Visa and MasterCard.
The process was ruled anti-competitive by a federal judge in February, and though AmEx is appealing that rule, a separate court has ruled that the policy cannot stay in place while the appeal is decided.
The outcome will be that merchants starting next month will be allowed to offer discounts or rebates for customers using a non-Amex card brand. They will also be allowed to display signs showing their preferred brand – which, given their high merchant, fees may not be American Express. The new ruling also allows merchants to negotiate directly with Visa or MC for a lower rate for fees in exchange for the merchant agreeing to steer customers toward their cards.
"These fees are a part of doing business, but you’d be silly not to consider all of your options,” said Evan Johnson, owner of Rocky’s Aqua Restaurant in Clinton, Connecticut, according to The Wall Street Journal.
And AmEx, despite the fact that they are appealing the decision that took it away, seems to agree that steering is not the best plan going forward.
“Steering is not a good thing for consumers and we believe many merchants agree,” the company said in a statement.
“MasterCard already is looking to tap into merchants’ new flexibility,” says Chris McWilton, president of North America for the Purchase, New York-based network.
He noted, “these are all things we have been thinking about for some time because we saw this coming down the pike,” though he declined to offer the WSJ a more complete roadmap.
A spokeswoman for Visa declined to comment.
U.S. District Judge Nicholas Garaufis, who oversaw the AmEx case, laid out specific language that AmEx must use to alert merchants to the rule change. The notification also warns merchants that they aren’t permitted to disparage AmEx or mischaracterize its brand. They also aren’t allowed to charge customers more for using the AmEx card – though they can offer a discount for using a non-AmEx card.
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