The British Airways American Express credit card is among those likely to be removed from the UK market after the European Court of Justice (ECJ) issued a ruling against the card provider.
American Express lost the appeal, which means it will now be limited in the amount it can charge retailers that accept Amex payments made using some of its cards.
Under EU rules that took force in October 2015, credit card transactions which involve four parties – the cardholder, retailer, card provider (like rival networks Mastercard and Visa) and the issuing bank (such as Lloyds Bank or NatWest) – have limits on the level of interchange fees that can be charged to retailers by the card companies.
This means retailers cannot be charged more than 0.3% of the transaction value if the customer chooses to pay with a personal credit card. The cap resulted in numerous rewards and cashback card providers withdrawing or scaling back their offerings.
However, these rules do not apply to cards where there are three parties involved in the transaction, such as those offered directly by American Express. This is because Amex acts as both the card provider and issuing bank. In practice, this means it can charge higher fees to retailers and subsequently give cardholders better rewards.
But this week’s European-wide ruling has judged that in cases when a card is co-branded, such as with an airline, this counts as a fourth party and thus fees charged to retailers must be capped. This is likely to mean the generous rewards offered by these cards will become financially unsustainable.
Rob Burgess of credit card rewards comparison site Head for Points says this means popular Amex cards from British Airways and Nectar will “almost certainly cease to exist” in their current form.
American Express says it is reviewing the judgement before deciding its next step.
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