AmEx On Trial Over Credit Card Processing Fees

July 8, 2014, Written By John H. Oldshue

American Express went on trial yesterday with the U.S. government and 17 states claiming AmEx stifles competition from other credit card companies that charge lower processing fees.

The case alleges that American Express will not allow merchants to offer discounts and other incentives to customers who wish to pay in cash or with credit cards from other companies such as Visa or MasterCard.

American Express charges higher processing fees than any other credit card provider, and merchants are looking to encourage competition among credit card companies by offering incentives to customers who choose to use one over the other.

American Express says their rules protect customers from price discrimination, and claim these rules have helped promote competition. The company says its accounts only make up 26% of the market in terms of consumer spending, and just 15% if debit cards are taken into consideration. With such a small share of the market, American Express says they are not capable of harming competition.

The Justice Department believes it can show that American Express’ behavior has had an adverse influence on competition, no matter how small its share may be.

This trial is an extension of the one launched back in 2010 against American Express, Visa and MasterCard. Visa and MasterCard choose to settle in court the same day the case was filed, but American Express held off on the settlement.

U.S. District Judge Nicholas Garaufis of Brooklyn will preside over the trial, which will not have a jury and could last two months.

The information contained within this article was accurate as of July 8, 2014. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.

About John H. Oldshue

John Oldshue is the creator of He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for
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