AmEx and the DoJ Go to War

Apr 09, 2015

This week American Express (AmEx) and the U.S. Department of Justice issued proposals to a federal judge for a rules change related to merchants steering customers to cheaper forms of payment than AmEx. These proposals are in response the DoJ’s claims that AmEx’s steering practice is a violation of the Sherman Anti-Trust Act. On February 19, a federal court agreed with the DoJ that AmEx’s anti-steering rules, or non-discrimination provisions (NDPs) do violate anti-trust laws, and that both sides had until Monday to propose remedies that would least affect AmEx’s business model. The proposals submitted by the DoJ and AmEx were miles apart, however, and AmEx states that it plans to appeal.

AmEx argues that it delivers a higher spending customer to retailers and has the highest discount rates among the four major payment networks. AmEx executives claim that if the NDPs are eliminated, the company will not be able to survive. Many observers dispute this claim. The DoJ believes that AmEx should not be allowed to stop merchants from offering rebates or discounts on products and services for using a payment form other than what was initially presented. While AmEx’s proposal would basically reinstate the restrictions that the court found unlawful.

AmEx wants the ability to control some steering, including the authority to prevent “mischaracterizing its network and products,” the ability to terminate merchants that steer, and to receive notice from merchants that intend to steer. AmEx also wants to negotiate its own steering agreements. The company also claims that the court’s ruling will not help consumers, but will only hurt AmEx’s ability to compete with its rivals like, Visa Inc. and MasterCard Inc. AmEx representatives state that they believe the court’s ruling is misguided and flawed, and that they will prevail upon repeal.

The DoJ also went after Visa and MasterCard over their anti-steering rules, however these two companies settled out of court by agreeing to change their steering rules.

Does your herbal supplement business process important credit cards like Visa and MasterCard? Do you have ties to AmEx and are concerned about this latest ruling? You may have to consider dealing with other credit card companies. Contact and talk to our specialists about protecting your herbal supplement merchant account today.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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