So Walgreen gets a break on AMEX merchant fees, and rumor has it that Costco pays about 10 cents on AMEX transactions, but what about the rest of the merchants? AMEX went to court to get VISA and MasterCard to change their rules so that credit card issuers can issue AMEX prodcuts. AMEX keeps on forgetting that cardholders are only half the problem. Credit Card payment system is a three party systems, card issuers, cardholders and merchants. Its important that the three parties derive value from the system, otherwise it is unbalanced and favors one over others.
Issuers like MBNA and Citi are happy to issue AMEX along with VISA and MasterCard if it gets them more cardholders. The issue is how is AMEX going to increase the number of merchants that accepts AMEX. VISA and MasterCard claim about 21 Million merchant locations, AMEX is falls way short of that number. It remains to be seen how will AMEX balance the lower merchant fees to get more merchants and yet pay the high "interchange" or "transfer fee" to its new issuers.
It also remains to be seen how many other merchants are going to wake up and protest againts high merchant fee charged by AMEX. It time to AMEX to come out and compete in the market now, they got the wins in the courtroom, lets see how they do on the main street.