At the end of June, you probably heard a lot of news about Supreme Court rulings. As the court weighed in on a whole host of hot button issues, there’s one that might have flown under your radar. On June 25 the Supreme Court narrowly sided with American Express in a case that impacts merchants, credit card processors, and the industry as a whole. Let’s break down the ruling and see what it means for you.
No More Steering
In general, American Express charges merchants higher rates to accept its cards than its competitors such as Visa or Mastercard. Since no merchant likes paying credit card processing fees, this incentivized business owners and cashiers to try to discourage the use of American Express cards and to push, or “steer,” consumers to pay with other card brands. American Express was not thrilled with this development and decided to put language into their contracts stating that such steering practices were not permitted – merchants couldn’t try to influence the type of card their customer paid with, plain and simple.
The Justice Department and several states got together and filed Ohio v. American Express, a suit that sought to bar American Express from including these types of anti-steering provisions in their contracts. They argued that such language was harmful to merchants and should be disallowed. In the majority opinion, written by Justice Clarence Thomas, the Supreme Court ruled that this interpretation was too narrow-minded. The plaintiffs needed to prove, he wrote, that such language was disadvantageous to both merchants and consumers – and that they had failed to do so.
What Does This Mean for Me?
Quite simply, this ruling means that as a merchant you are not allowed to influence your customers to pay with one type of credit card over another. If you’re in the habit of sighing heavily when a customer produces an American Express card, it’s time to leave that act behind. The court’s ruling empowers customers to make their own decisions for which cards to use, with no interference from the merchant. If merchants don’t like American Express’s fees, well, they don’t have to accept their cards (or so the thinking goes).
Perhaps even more impactful, however, is the implication this ruling has for how Americans do business as a whole. The court’s reasoning was that even though American’s Express’s anti-steering language was potentially harmful to merchants, it was not so to consumers and therefore could stand. Take a tech giant like Google or Facebook, for example. This ruling closes the door to potential suits brought by small competitors, advertisers, etc. on anticompetitive grounds. In essence, the court ruled that behavior that may appear anticompetitive when considering one subset of affected people or entities may in fact be completely fair and beneficial when considering all parties concerned. This could embolden large companies to take steps to protect their hold on the market that they would otherwise have never considered.
Stay on Top of Credit Card News
You have a lot going on – it’s unlikely that late breaking news in the credit card industry makes it on your radar every day. That’s where 360 Payments comes in. As your credit card processor, we work hard to ensure you’re constantly up to speed on changes in the industry that affect you and your customers. Want to be part of our family? Give us a call at 1-855-360-0360 or drop us a line on our website. We’d love to show you how we’re a different kind of credit card processor.
PS – Cash discounting sounds a lot like surcharging, but it’s most definitely not the same thing. Read why not.
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