American Express will wage a "multiyear" court battle against the U.S. Justice Department over its suit regarding interchange fees, and the government's allegations the credit network's policies are anticompetitive, an Associated Press report said. In a conference call the day thesuit was filed, vice chairman Ed Gilligan said the company had "no intention of settling this case."
Gilligan added the government's "proposed remedy would promote steering customers from one payment network to another, and that is a one-sided approach that will do nothing to enhance competition," the AP said.
American Express typically charges store owners more for interchange fees than the other networks the Justice Department sued, MasterCard and Visa, the AP reported. As a result, AmEx said merchants will encourage customers to use its competitors to take on credit card debt rather than allow them to pay with a card that would cost the retailer more.
In the settlement, both Visa and MasterCard said they would allow merchants to begin offering customers discounts or rebates for using a particular type of card when taking on credit card debt, the AP reported. However, American Express contends that its policies actually protect cardholders, who tend to be more affluent and take on credit card debt more frequently than other consumers.
"In effect, the government is arguing that we cannot freely negotiate with our merchants about how they treat our card members at the point of sale," American Express general counsel Louise Parent told the AP. She added that contracts with retailers are "intended to shield consumers from pressure by merchants not to use the cards of their choice."
Interchange fees, more commonly known as swipe fees, have been a point of contention between store owners and credit card networks for some time. Even relatively small retailers can pay thousands of dollars per year just to process transactions for their customers. Advocates argue that this leads to higher prices across the board, and negatively impacts those who choose to pay for their purchases with cash.