Hørringssvar American Express Dato: 26.01.2016 Svartype: Med merknad American Express has reviewed the Norwegian Financial Supervisory Authority’s Hørringsnotat – innførning av forordning om interbankgebyr (2015/751) i norsk rett, and agrees with their proposal to exercise the exemption for three-party schemes using issuers and acquirers. The exemption would apply to three-party schemes using issuers and acquirers whose domestic sector share of regulated transactions is below the 3% threshold. As the relevant E.U. legislation states (Interchange Fee Regulation Article (IFR) 1 (5)), the calculation for determining relevant sector shares would be based on those transactions subject to price regulation under the IFR. American Express maintains that, as a matter of principle, smaller players who do not pursue multilateral interchange fee arrangements should not be subject to the same rules as the dominant players whose conduct has prompted this Regulation. However, we recognise that the final E.U. legislation only provides Member States with discretion to exempt three-party schemes from price regulation for a transitional period, subject to a 3% sector share cap. For American Express, this exemption is critical to our ability to provide competition through our licensee relationships. The relevant sector share for the purposes of the exemption calculation for American Express in Norway is just 0.85%. [1] The exemption should therefore be invoked for the transitional period set out in the draft legislation, to allow three-party schemes time to adapt to the new regulatory environment. Implementing price caps for four-party schemes is a fundamentally different proposition to capping fees in a three-party scheme business model. The four-party schemes are better able to put such changes in to practice, with almost immediate effect, given their centrally-set interchange pricing model (which prompted the introduction of the Regulation). In addition, these schemes have been subject to antitrust investigations, and to decisions that cap a significant portion of their multilateral interchange fees in Europe for many years, giving them an advantage in preparing both operationally and strategically for the implementation of price caps across the whole of Europe. Finally, these schemes have huge sector shares; the effect of the introduction of price caps will not threaten their position as dominant players. Three-party schemes with licensees, by contrast, have very small sector shares and a more challenging compliance burden. Enacting such measures in bilaterally-negotiated contracts is a more complex procedure, which would take much longer to implement, as will working through the operational and strategic implications. The additional time granted via the exemption would therefore enable these schemes to adjust to the new framework. In Norway, American Express works with two financial partners, DNB, to issue cards and Teller to acquire merchant transactions. These partnerships are critical to our ability to be a relevant participant in the Norwegian payments sector, as well as to providing competition to the dominant payment networks. This business model of partnering with financial institutions is particularly important given the ubiquity of the four-party schemes, and the fact that they work with thousands of banks with broader banking relationships and branch networks, which provide the four-party schemes with far greater distribution channels. Importantly, three-party schemes would not be conferred any competitive advantage through invoking the exemption, nor would it have any impact on our merchant pricing. This is because the direct relationships we have with merchant customers with whom we negotiate the cost of card acceptance are completely separate to the licensing relationships we have in Norway. At the same time, American Express would in any event be indirectly impacted by the price caps set out in the Regulation, as our merchant pricing is always subject to commercial negotiation, and merchants only work with American Express based on the value we deliver, relative to our competitors. In addition, in its ruling against MasterCard in May 2012, the European General Court expressly rejected MasterCard's argument that regulation of its multilateral interchange fees would unfairly harm its business in favour of three-party schemes . [2] Not invoking the exemption could have detrimental impacts. Our existing partners are extremely concerned about the impact that pricing caps would have on our relationships. We therefore need more time to adapt our model and strategy, otherwise it is highly likely our licensees will take the view that their relationships with us are unviable if subject to price caps and will be forced to terminate immediately, without allowing us the time to work through the implications for cardholders, which would be extremely disruptive. Were that to happen, we would see a reduction in choice and competition in a sector already dominated by a duopoly, which today accounts for more than 95% of the sector. We therefore strongly support the Financial Supervisory Authority’s proposal to implement the time-limited exemption for three-party schemes using issuers and acquirers and are looking forward to continuing our dialogue in the months ahead. [1] Based on Norges Bank data. [1] See General Court, MasterCard and Others v Commission , Case T-111/08, 24 May 2012, para. 117 ( http://curia.europa.eu/juris/document/document.jsf?text=&docid=123081&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=1192532 ). Finansdepartementet Til høringen Til toppen
