Supreme Court Sides with Amex Over Swipe Fees

June 26, 2018

Despite progress being made in recent years to ease and make more transparent the “swipe-fees” charged to businesses by credit-card companies for consumer credit card purchases, the U.S. Supreme Court took a step backward yesterday by ruling in favor of Amex on the issue of swipe fees. This ruling essentially narrows the options small businesses have to reduce swipe fees, and allows credit card companies to continue preventing them from offering any incentive or encouragement to customers to use lower-cost cards. A small-business owner looking to lower swipe fees will now only have the option of not accepting a particular card—far from an ideal choice for most small businesses.

The Supreme Court, with this decision, engrains the disadvantage small businesses face with their credit card companies, and offers them few viable options to address these high costs. Previously, to address the notably higher swipe fees charged by Amex, many small firms encouraged customers to use a different form of payment, however this ruling will prohibit small firms from offering such incentives, and essentially bars them from even telling their customers about the higher charges incurred by using an Amex.

The 5-4 ruling is the result of a lawsuit initially filed in 2015 by the U.S. Department of Justice against Amex for violating antitrust rules. In the ensuing years, through a series of appeals, eleven states—Ohio, Connecticut, Idaho, Illinois, Iowa, Maryland, Michigan, Montana, Rhode Island, Utah and Vermont—ultimately led the suit and filed an appeal to the Supreme Court which agreed last October to hear the case.