AmEx CEO Defends Merchant Fees
New York (
) --
American Express
(AXP) - Get Report
CEO Kenneth Chenault argues that merchant rates at the center of a U.S. Justice Department lawsuit are justified because of the "exceptional" customer service the card issuer provides.
American Express CEO Ken Chenault |
"It is about freedom of choice for the consumer. The merchant has a choice to accept or reject a card. There is no remedy in the DOJ settlement that there is any economic incentive that has to be passed on to the consumer," Chenault said. "This is the government interfering in individual consumer transactions, which I don't think is appropriate."
Chenault addressed why the company is fighting the lawsuit, and his thoughts on the Credit Card Reform Act, at a breakfast hosted by
The Wall Street Journal
in Bryant Park earlier today.
The Department of Justice filed
an antitrust suit against American Express last month arguing that the company generally charges higher fees for acceptance of its card network than
Visa
(V) - Get Report
or
MasterCard
(MA) - Get Report
.
"It is critical to take a principle stance that will in fact drive value for your company in the long term," said Chenault. "At the end of the day the Justice Department has to prove against their own arguments that we now have market power," he added.
Chenault also spoke about the financial reforms impact on the credit card business. He said that American Express will not feel the negative effects of the legilsation as other credit card companies because of the company's, "affluent customers." However, Chenault said he is concerned that there is not enough credit available to the lower and middle classes because the new regulations will limit risk-based pricing.
"We have to figure out a way to lend credit to those sectors," he said. "On the Credit Card Act, I think it is a good thing but I'm concerned with the availability of credit to the lower income and middle class."
--Written by Maria Woehr in New York.
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