What American Express Did Not Say in Its EU Rebuttal

While the news seemed more targeted toward American Express, there was secondary and tertiary concern over Visa Inc. (NYSE: V) and Mastercard Inc. (NYSE: MA). In some aspects the proposal may bring back fears over interchange fees that were a hot topic in recent years in the United States.

We have crafted what AmEx did not want to say in a translation, but of course only after it gave its own bulletin points.

• “The publication of formal proposals by the Commission will mark the start of a lengthy legislative process and review period. We expect these proposals to prompt extensive debate among many market participants.”… TRANSLATION: “We will be lobbying against this and any efforts to protect our fee structure, and we plan to tie up the outcome for as long as possible.”
• “The proposals focus primarily on and cap the interchange fees charged by four-party payment systems, such as Visa and MasterCard.”…. TRANSLATION: “We hope and expect that this does not apply to us.”
• “The discount rate that American Express charges merchants would not be regulated.
  Our proprietary consumer and corporate card businesses are not covered by the proposed pricing caps.”… TRANSLATION: “Our high fees, we believe, should still be allowed to continue.”
• “Three-party systems, such as American Express, would only be covered when they license other institutions to issue cards, as in our Global Network Services Business. GNS represents a relatively small percentage of our European business.”… TRANSLATION: “We are hoping that we don’t have to care about this too much.”
• “The provisions that focus on separating the payment network and processing functions do not appear to impact proprietary networks like ours.”… TRANSLATION: “We hope that we have no break-up worries and our lobbyists are working on this.”
• “Given the potential impact on consumers and competition within the European payments sector, American Express has been in touch with senior policy makers at the Commission and will continue to represent its positions vigorously throughout the process.”… TRANSLATION: “We are teaching the socialists that we still get to make money, and our lobbyists will be visiting them shortly.”

Shares of Visa Inc. (NYSE: V) were hardly impacted by the news in the first place. The mid-day price is down only about 0.1% at $189.15. Mastercard Inc. (NYSE: MA) is now up by 0.25% at $591.20, but shares were actually down by almost 2%, or almost $10, early in the trading day.

While the clarification points and comments from American Express Company may seem very facetious, this is just part of the game. Companies have to be politically correct and they can’t exactly just say that they will be fighting issues over money in so few words. New proposed regulations sneak out, and the companies affected fight back. American Express shares were down almost 5% early this morning but the stock price has recovered and shares are down now by only 2.2% at $76.55 since the company has issued its statement.