To recap: American Express wants VISA members to issue American Express card products too.
ROUND #1: The fight got underway last May when AmEx threw its first punch at VISA by telling bankers VISA was not looking out for the interest of all VISA members and was limiting competition through various bylaws prohibiting VISA members from issuing American Express cards. VISA slugged back with its charge that American Express was a "Trojan Horse" for bankers, poised only to attack a bank's customer base. This round was a draw.
ROUND #2: American Express throws a below-the-belt punch at VISA by prodding the U.S. Government's Department of Justice to investigate VISA's by-laws for anti-trust violations. VISA becomes understandably quiet for the rest of this round. No one scored in this round.
ROUND #3: American Express then throws a barrage of punches in Europe, Asia, Australia and Central/South America seeking to derail any plans by VISA's regional boards to adopt similar bylaws shutting out American Express. The European punch landed particularly hard putting VISA on the ropes. American Express throws another series of punches announcing bank deals with a few banks outside the U.S. VISA tries to save face but AmEx dominates the round. Chalk one up for American Express.
ROUND #4: American Express lands a surprise left-hook on VISA by hooking up to do a deal with one of VISA's largest members, Advanta, on November 7. American Express and Advanta put together a deal whereby American Express cardholders and Advanta's VISA cardholders can jointly earn points in American Express' Membership Rewards program. Since Advanta is merely "tying" a VISA card to an American Express card and not "issuing" an AmEx card it appears to stay within VISA's regulations. VISA goes down for a seventeen day count.
VISA then gets up swinging on November 25 and strikes back with a trademark infringement lawsuit. VISA also amends its rules to prohibit its members from "tying" a VISA product to a competitor's card product. VISA also weakens the American Express stance by putting Advanta on notice. While American Express and Advanta wobble around MasterCard jumps into the ring on November 27 and throws identical punches at both American Express and Advanta. It begins to looks bad for American Express as most of the crowd expects Advanta to leave the ring.
But feisty Advanta runs back into the ring and throws two very unexpected punches by counter suing both VISA and MasterCard. American Express is elated and sets down to watch VISA and MasterCard fight its own members. To top it off AmEx could not have found a better fighting partner: Advanta is led by the charismatic, former leader of MasterCard International, Pete Hart and Advanta ranks as the nation's eighth largest issuer of VISA and MasterCard.
But wait the fight is getting out-of-control . . . the referee calls for a cooling off period (or in lawyer terms a "standstill agreement").
Even through American Express is winning this round it's not over yet.
Will Advanta throw in the towel and settle its dispute out-of-court ?
Or will this become a full blown intrasystem battle ?
Does American Express have another partner in the wings should Advanta back down ?
Will MasterCard break from rubberstamping VISA and let Advanta have its way with perhaps some minor modifications ?
Stay on the edge of your seats there's more action between now and Jan 22 when the cooling-off ends.
