american express co (AXP) Key Developments
Federal Judge Rules against American Express in Antitrust Suit
Feb 19 15
A federal judge ruled that American Express violated U.S. antitrust laws by barring merchants from asking customers to use one credit card over another. The case was a blow to American Express, who argued that its policies kept it competitive against the larger payment networks of Visa and MasterCard and their bank partners. American Express plans to appeal the decision. U.S. District Court Judge Nicholas Garaufis announced in his ruling that American Express nondisclosure policies harmed competition and prevented merchants from trying to lower their credit card processing costs. The Judge also announced that American Express policies kept consumers unaware how much using their credit cards cost merchants, which required merchants to pass along those costs in the form of higher prices. At the centre of the case are the fees merchants pay to process credit and debit cards, which have been largely hidden from the average consumer but are a major cost for any merchant who wants to accept plastic. Every time a credit or debit card is used at a merchant, the banks and payment networks take a small percentage of the transaction as a fee. The fee varies on what type of card is used, but typically debit cards are cheaper for merchants to process than credit cards. The credit cards that gave consumers perks such as reward points, cash back or airline miles, which are the cards American Express offers, were among the most expensive for merchants to process. Consumers never directly pay for these fees, but do so through higher prices merchants must charge to cover the processing costs. American Express required its merchants to accept all credit cards equally and could not encourage consumers to use one credit card over another through practices like signs that say "we prefer visa" or possibly offering discounts to discover cardholders. American Express refused to settle, and the issue went to trial last summer. The company argued at trial that merchants could discriminate against American Express cardholders due to the higher fees and also argued that, as the third-largest payment network, it was not in a position to stifle competition. Those arguments were rejected. Judge Garaufis ruled that the loyalty American Express cardholders have for their cards have been often enough to keep merchants accepting American Express cards.
American Express, Costco to Be Ending Their Exclusive Deal
Feb 13 15
Costco shoppers who have been limited for years to American Express credit cards may get a new option next year after an exclusivity deal between the companies expires. American Express said that it hasn't been able to come to an agreement with Costco on renewal terms. The current agreement covers U.S. stores and dates back 16 years. It will end March 31, 2016. American Express said that Costco pays a significantly lower rate than the overall average it imposes on other retailers as part of the agreement. That arrangement gave the credit-card company exclusivity for almost two decades, though Costco also accepts debit cards and cash.
American Express Company - Special Call
Feb 12 15
To discuss the context and business implications related to company's merchant acceptance agreements with Costco Wholesale Corporation
Digital River, Inc. Expands Relationship with American Express to Enhance Payment Services in Mexico
Feb 3 15
Digital River Inc. announced that it has expanded its relationship with American Express to include support for fully localized American Express card purchases in Mexico. In combination with American Express, Digital River will process Mexican pesos and support consumer installment payment plans through its Digital River World Payments solution. Together, the two companies will help domestic and international businesses that have a local entity in Mexico reach more consumers as they grow their online sales in the region. Now merchants using the Digital River World Payments solution can access American Express consumers in all international markets where American Express is accepted, including Brazil, Europe, Hong Kong, Mexico, North America, Singapore and others. The enhanced offering builds on Digital River's strength in global payments, adding to an ecosystem of more than 200 international and local payment options worldwide.
American Express Plans to Lay Off 27 Employees at its Weston Global Billing Services Office; Builds New Office in Sunrise for its South Florida
Jan 30 15
American Express announced that it would permanently lay off 27 employees at its Weston Global Billing Services office. The company notified the state with a WARN notice that it would start eliminating those position on April 3. The announcement followed earlier rounds of position cuts, bringing the total number of cut jobs above 400. The company announced in September 2013 that it is closing its Weston office and moving the billing portion of the work to U.S. vendor DST Output. The 27 employees affected by the cuts were customer care professionals.
The company is building a new office in Sunrise for its South Florida workforce remaining after the cuts.