AmEx Looks to Have Its First Bank Issuer by Year’s End

American Express Co. says it will be a matter of “months,” not “years,” until banks in the United States are issuing the company's card products now that the U.S. Second Circuit Court of Appeals has thrown out a motion from Visa International Corp., Visa USA Inc., and MasterCard International Inc. to review a lower-court ruling that clears the way for banks to issue cards from AmEx and Discover. The New York-based financial-services company says it is “actively and aggressively pursuing negotiations” with potential U.S. bank issuers, and expects to have at least one issuing agreement completed with a bank by the end of the year. In a series of six court orders issued Jan. 9, the full Second Circuit panel rejected the Visa-MasterCard request, refusing to review an October 2001 ruling by U.S. District Court Judge Barbara S. Jones that the giant bank card associations had violated anti-trust law by barring members from issuing AmEx and Discover cards. Jones stayed her ruling pending appeals. A three-judge panel of the Second Circuit last September upheld Jones's decision, and in its decision earlier this month the full Second Circuit also denied a request from Visa and MasterCard for a re-hearing from that panel. Visa USA Inc. and MasterCard last week filed a motion with the Second Circuit seeking a stay of Jones's decision pending their appeal to the U.S. Supreme Court. The Department of Justice, the plaintiff in the anti-trust case, responded with a brief opposing the stay, arguing it would lead to “irreparable injury to competition and consumers” while the appeal was in process. Contacted this morning, AmEx called the Supreme Court appeal a “stalling tactic” and all but claimed victory in the case. “The (Second Circuit's) decision is another clear loss for Visa and MasterCard, and illustrates how they've broken the law over a long period of time,” says an American Express spokesperson. “It definitely underlines the legal ramifications of the antitrust case are over.” Visa and MasterCard did not return calls seeking comment. AmEx, which has issuing agreements already in place with 79 banks outside the United States, refuses to disclose which U.S. banks it is currently talking to, nor will it project how many bank-issued cards it expects to have in circulation. The company currently issues 35.1 million cards domestically, or 61% of its worldwide card base. The spokesperson says the negotiations with banks accelerated after the Second Circuit decision last fall. This latest action by the full Second Circuit has, he says, lent even more impetus to the company's efforts. “To the extent it encourages banks to partner with American Express, that speaks for itself,” says the spokesperson.