Amex Blames Visa for Loses on its Credit Card Applications

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Before going into details of the discord between American Express and Visa, let's say a few words of the legislation that gave the legal force to the suit. Have you heard of the Antitrust Rule? If you are ordinary cardholder without a financial or legal education, you must be incompetent in this question.

Ok, the Antitrust Rule covers any law that restricts business practices judged as monopolistic or unfair. So, how did Visa violate the rule so that it was assigned to pay American Express $2.1billion dollars?

The Supreme Court has fairly accused Visa and MasterCard of breaking the Antitrust rule by prohibiting its member banks from offering their customers credit card applications of their rivals.

American Express is not the only company outraged by such a self-profit policy on the part of Visa and MasterCard. Discover company has also filed a lawsuit claiming to be compensated for billions of dollars they believe they have lost due to keeping back their credit card offers by Visa.

Such a move from these two credit giants is not quite comprehended and far not approved by most financial experts and analysts. The point is that the credit card industry has advanced significantly in the matter of antitrust legislation and such important institutions as Citibank and Bank of America are already offering their customers American Express-branded credit cards.

The UK-founded financial company HSBC has also reached an antitrust agreement with Discover bank, although its policies do not quite comply with another, no less important legislation - Servicemembers' Civil Relief Act. The Antitrust Rule is thus a most essential element in the competition between credit companies helping their mutual benefit.

So, Visa and MasterCard have in fact deprived Amex and Discover of billions of revenues from credit card fees and rates customers would have paid, had they got these cards.

So, what's the Supreme Court's settlement of the case? The agreement assigns Visa to pay the amount claimed in portions. First it pays $945 million and then makes an additional pay by the end of March. Then, American Express will regularly be paid $70 million each quarter until the settlement is fully paid and the agreement thus effected.

The money is planned to cover several significant expenses, such as investments in credit card rewards program and marketing operations as well as the cost of the legal process.

And what about MasterCard? Is it also responsible for the revenue loses carried by both American Express and Discover Financial? Well, it is not quite clear yet whether MasterCard will also be subject to the revenue damages coverage, but its spokesman is firmly confident in their rightful position and thus legitimate protection.

Still, even without the MasterCard penalty payments, this settlement enforced by the Supreme Court is said to be the largest amount ever paid to resolve an antitrust issue.

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