AmEx Cannot Stop Merchants From Promoting Cheaper Cards

May 4, 2015, Written By John H. Oldshue
Ratingen, Germany - June 21, 2011: Closeup studio shot of  credit cards issued by the three major brands American Express, VISA and MasterCard.

A federal judge has ordered American Express to adjust its merchant agreements which prohibit retailers from encouraging their customers to use credit cards with fewer transaction fees. The ruling by U.S. District Judge Nicholas Garaufis could result in some better deals for shoppers and a loss of revenue for AmEx.

American Express has some of the costliest interchange fees in the industry, but until now, merchants were not allowed to steer customers to pay with cheaper cards. Under this ruling, store owners will be able to reward customers who choose to pay with Visa, Discover, or MasterCard with incentives, such as discounts or rebates.

This is the most recent in a series of blows American Express has faced over the last few months. The company lost its longstanding contracts with JetBlue and Costco, despite the fact that it consistently rates at the top for customer satisfaction.

American Express spoke out about the ruling in a statement, saying, “We plan to appeal the court’s ruling because we believe it will not provide any benefit to consumers and will in fact harm competition by further entrenching the two dominant networks,” referring to Visa and MasterCard.

Merchants will be allowed to promote cheaper alternatives in as little as 30 days.

The information contained within this article was accurate as of May 4, 2015. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.