Thanks to a court ruling in February against American Express, next month will mark the beginning of opportunity for retailers who allow customers to use Amex, Mastercard, and Visa in their stores. This is according to the Wall Street Journal which says that another court “denied the company’s request to keep the rules in place pending its appeal.”
This ruling was made as a result of what was deemed “anticompetitive” practices by American Express to push their vendors to not be able to steer customers to other credit cards. Vendors would normally like customers to use other cards (besides American Express) because Amex charges them a higher rate to process their cards with the transactions.
Now, Amex has said they will stop this practice next month and vendors will have the option to steer customers towards using Visa and Mastercard cards instead of the Amex cards that they may otherwise use. Vendors cannot charge more for customers wanting to use Amex, so if Amex is your preferred card, no worries there. But, they can use discounts or other types of incentives to encourage use of the smaller-priced cards for transaction purposes.
We are not talking about a big discount, of course, because the difference is only about 1%. But, if you are purchasing some large item and the vendor is offering a slight discount to use Visa or Mastercard instead, it can add up! Plus, if Visa and Mastercard begin offering lower rates to vendors to motivate them to encourage consumers to use their cards, it could become a somewhat regular practice with the discounts.
Vendors are not required to do this, of course, but we may very well see it as saving even a fraction of a percent on the millions of transactions processed could add up to big savings. We also do not know yet how this discount/rebate system might work. If a vendor, like Staples, decides to offer an added percentage with their reward program for customers that use Visa or Mastercard, it would not cost Staples much at all to do that since so many reward certificates go unused. But, it may be enough to steer customers towards using the cards that are easier on Staples for the purpose of transaction fees.