American Express Statement on the European Commission Proposals for Regulation of Card-Based Payment Transactions

American Express Company

today issued the following statement in response to the European Commission's draft proposals to regulate card-based payment transactions in the European Union (EU): “Today's proposals are the start of a lengthy process and American Express will be actively engaged with policymakers to help ensure that European Union policies: Encourage more vigorous competition; Serve the interests of consumers and merchants; Encourage innovation and investment in European payment services; Prevent further entrenchment of the two dominant, inter-bank networks. “Elements of the proposals issued today broadly affirm that: Our merchant discount rate would not be regulated; Transactions in our proprietary business would not be directly covered by the pricing caps; The requirement to separate network processing functions would not apply to transactions in our proprietary business and most, if not all, transactions involving our issuing or merchant acquiring partners; Commercial payments would not be directly covered by the pricing caps. “Consistent with our initial assessment, most transactions in our Global Network Services (GNS) business would fall within the scope of the proposed pricing caps. Certain proposals would also regulate how we grant licenses to GNS partners. The GNS business is an alternative to the two dominant inter-bank networks. It allows select European financial institutions to offer differentiated value to their customers by issuing cards and/or acquiring merchants on the American Express network. “Unlike the two dominant networks, American Express does not set prices collectively or operate on the basis of inter-bank arrangements. Authorities around the world, including those in Europe, have not found our pricing practices to be anti-competitive and have not challenged our licensing arrangements. We believe that any new regulatory framework should recognize fundamental differences in business models and market positions. “We also believe that to subject smaller networks that do not operate on the basis of inter-bank arrangements to the same remedies as the dominant, inter-bank networks that have engaged in anti-competitive conduct would be counter-productive to the Commission's aims. It would also be inconsistent with the EU's own clear objectives, and marks a significant departure from existing legal and regulatory precedent. “Unlike with Visa and MasterCard, no merchant must take American Express, and no bank must partner with us. When merchants choose to accept our card, and when banks choose to issue cards on our network, it is because of the value we deliver. “Separate proposals would prohibit certain provisions in our merchant contracts and permit merchants to impose surcharges in all EU countries. We believe these proposals would not be beneficial to competition and are anti-consumer. In those European countries where surcharging is already permitted, most merchants have chosen not to add an extra fee at the point of sale. “In all, the proposals could affect the pricing and operations of the European payments industry over an extended period of time. Some of the changes would impact us directly; some, indirectly. Others may create new business opportunities. “We want to ensure that the changes that ultimately come from this process result in a strong, efficient, competitive payments sector. And, as we have when adapting to similar changes in other markets around the world, we will stay focused on delivering differentiated value to cardmembers, merchants and business partners that provides a competitive alternative to the two dominant networks.” About American Express American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, foursquare.com/americanexpress, linkedin.com/companies/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.