“American Express is not a credit card company.”
So, what really is Amex then?
Amex is a platform that bridges 2 separate markets.
Isn’t that just jargon?
Well, not according to the Supreme Courts.
Isn’t their business to facilitate payments?
Yes. But it's only a small part of their business.
First, there are merchants who want to be able to transact effortlessly.
Second, there are consumers who want the safety of transacting and access to credit.
A platform should impact the lives of both.
Amex provides umpteen benefits to consumers that allow them to become part of a network rather than just providing a credit facility.
They were creating an exclusive membership network.
Providing users with services and products from travel assistance to insurance to promotions.
Merchants wanted a trusted payment service that protected them.
Amex provided them with that assurance.
They both were only connected with the thread of payment – which is what Amex entered the relationship with but was not the value they stayed for.
This difference is what helped them quash anti-trust lawsuits * filed by the DOJ in the Supreme Court in 2018 – for some relatively gray practices.
* AmEx was sued by the DOJ for antitrust issues in 2018 for 2 primary reasons:
1/ Practices: They prohibited merchants from persuading usage of other cards to save fees.
2/ Pricing: Pricing of ~3% reduces industrial output by increasing the cost to the consumer.
The Supreme Court sided with Amex.