Are Amex And Apple Pay Playing Fair?

When it comes to payments, the bigger the player, the bigger the battle. So it seems a skirmish is brewing over fees. MasterCard has stated that its bank partners have “been hamstrung over Apple Pay while American Express is free to share its uncapped fees,” The Age reported Monday (Dec. 7).

The publication said the fact that American Express is the juggernaut that is debuting with Apple Pay outside the U.S. and the U.K. is evidence of the relative freedom from regulation that the company has relative to Visa and MasterCard, which has fees that are capped.

Elsewhere, in the Australia region, Eddie Grobler, who is the division president of MasterCard Australasia, told the site that he is happy the nation’s central bank will seek to regulate the Amex companion cards that will be capped at the same rate as has been seen with MasterCard – and added that all payment fees should be regulated at that level, including the cards issued directly by the company.

“Regulation of American Express companion cards is a small step in the right direction but it leaves enormous regulatory holes that mean retailers and businesses, and consumers will continue to see distorted costs for payments schemes, including American Express [proprietary], China Union Pay and PayPal,” Grobler told The Age.

Grobler maintained that in Australia at least, Amex is able to charge higher fees than Visa or MasterCard. That means higher margins to share with Apple, said the executive.

By way of comparison of the fees, the Amex fees stand at 1.7 percent per transaction, with Visa and MasterCard’s interchange fees capped at 0.5 percent, noted The Age, and yet there are some premium MasterCard and Visa cards that charge fees of 2.2 percent.