American Express Company (NYSE: AXP) today issued the following statement in response to the European Commission’s draft proposals to regulate card-based payment transactions in the European Union (EU):
“Today’s proposals are the start of a lengthy process and American Express will be actively engaged with policymakers to help ensure that European Union policies:
- Encourage more vigorous competition;
- Serve the interests of consumers and merchants;
- Encourage innovation and investment in European payment services;
- Prevent further entrenchment of the two dominant, inter-bank networks.
“Elements of the proposals issued today broadly affirm that:
- Our merchant discount rate would not be regulated;
- Transactions in our proprietary business would not be directly covered by the pricing caps;
- The requirement to separate network processing functions would not apply to transactions in our proprietary business and most, if not all, transactions involving our issuing or merchant acquiring partners;
- Commercial payments would not be directly covered by the pricing caps.
“Consistent with our initial assessment, most transactions in our Global Network Services (GNS) business would fall within the scope of the proposed pricing caps. Certain proposals would also regulate how we grant licenses to GNS partners. The GNS business is an alternative to the two dominant inter-bank networks. It allows select European financial institutions to offer differentiated value to their customers by issuing cards and/or acquiring merchants on the American Express network.“Unlike the two dominant networks, American Express does not set prices collectively or operate on the basis of inter-bank arrangements. Authorities around the world, including those in Europe, have not found our pricing practices to be anti-competitive and have not challenged our licensing arrangements. We believe that any new regulatory framework should recognize fundamental differences in business models and market positions.