American Express Loses Top Court Fight Over EU Card Fee Caps

Photographer: Andrew Harrer/Bloomberg

• U.K. court looking at AmEx dispute sought EU judges’ guidance
• EU court clarifies conditions when fee caps apply to AmEx

American Express Co. lost a fight against having EU card fee caps applied to its system in the U.K. after a ruling by the bloc’s highest court.

EU curbs that target the likes of Visa Inc. and Mastercard Inc. also apply toAmerican Express’s card system when there’s a co-branding partner or an agent involved, the EU Court of Justice said in a binding decision Wednesday in Luxembourg.

AmEx is fighting the application to its card scheme of 2015 EU rules that cap the fees banks can collect on transactions by so-called four-party card schemes such as those by Visa and Mastercard. The EU measures followed years of complaints by retailers, who say unfair fees push up the final costs of goods and services, and amount to a hidden charge on consumers.AmEx, which operates a different type of system, challenged regulators’ decisions to apply the EU fee caps to it by treating it like Visa’s and Mastercard’s in some cases.

A four-party card system has four players involved in every transaction –- the merchant and the merchant’s bank, and the consumer and the consumer’s bank. AmEx runs a so-called three-party system, which involves only one financial services provider.

“We are currently reviewing the court’s judgments,” AmEx said in an emailed statement. In the meantime, the company said it’s “committed to continuing to offer” products and services “that deliver value for customers and co-brand partners. American Express card members can continue to use their cards as normal.”

A U.K. court asked the EU top judges whether AmEx’s arrangements with co-branding partners or agents were enough to classify it as a four-party card scheme, or whether these partners had to actually be a payment service provider for the fee caps to apply.