Legal Seminar, Denver, CO
Payment Cards: What’s Not to Like? • Privacy: But do you value privacy enough to use another method? Or lose rewards? • Cost: someone must pay. But are merchants bearing these costs? – Annual fees (but consumers can choose options) – Debit card fees may be lower – but consumers like credit cards (and rightly so) – Surcharges can be imposed, but they are not common (interesting prospects for empirical research) Payment Cards: What’s Not to Like • AMEX won anti‐steering case (Ohio v. AMEX, 6/25/18) • Other card‐brands caved and removed provisions from contracts with merchants. (But they had less to lose!) • Amex depends on spending, not lending (like Visa, MC) – Invests in better rewards to retain loyalty from cardholders. – Charges higher fees to merchants to fund those rewards – Merchants wanted: accept Amex but prefer VISA/MC • Held: No antitrust violation here (affirming 2 nd Circuit) – Card transactions are still growing (no reduced output, increased prices) – “Negative externality” from friction created by steering – No inherent barrier to competition among other card brands
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