Payment Methods

Appeals Court Rules In Favor Of Amex Over Merchant Rules

American Express scored a victory on Monday (Sept. 26) after a federal appeals court paved the way for the credit card company to enforce rules that would prevent merchants that accept its cards from steering consumers to cards offered by competitors that have lower costs for the merchants.

The 2nd U.S. Circuit Court of Appeals in New York ruled that a lower court made a mistake when deciding American Express’ contracts with merchants restrained trade and violated antitrust laws. The appeals court said a judgment in favor of American Express should be entered in the case. The ruling is seen as a victory for American Express, which has faced criticism that it charges merchants too much money in fees.  The decision extensively cites and relies on work conducted by economists David S. Evans and Richard Schmalensee on multisided platforms and the economics of the payments industry.  (Evans is the founder of Market Platform Dynamics and Schmalensee is the Chairman; MPD is an owner of

The case resulted from a lawsuit filed by the U.S. Department of Justice against American Express, Mastercard and Visa.  MasterCard and Visa settled with the Justice Department and agreed to stop the anti-steering practices. American Express decided to fight.

The ruling comes at a time when American Express is trying to alleviate some of the pain merchants face in terms of credit card processing fees and other costs. In June, American Express announced changes to its EMV chargeback policy in order to ease the transition as merchants migrate their POS systems to be EMV-compliant.

This move is aimed at helping merchants limit their fraud losses, and as of the end of August of this year, merchants will not be liable for counterfeit fraud chargebacks for any transaction under $25. Amex will also limit the number of counterfeit fraud chargebacks to a total of 10 per card account. Under these new policies, the card issuer, instead of the merchant, will cover the liability for the additional counterfeit fraud transaction disputed from a card account after those 10 chargebacks. But it’s worth noting that this limit does not prohibit a card member from disputing more fraudulent transactions.

“Combating fraud is an ongoing priority for American Express,” said Mike Matan, VP of global network business for Amex. “We recognize the migration to EMV in the U.S. is an effort that will take time, which is why we are making these policy changes in order to provide flexibility to those merchants that may need more time to upgrade their point-of-sale terminals to accept EMV chip cards.”




The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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