Under EU rules that took force in October 2015, credit card transactions which involve four parties - the cardholder, retailer, card provider (such as Mastercard or Visa) and the issuing bank (such as Lloyds Bank or NatWest) – have limits on the level of so called ‘interchange fees’ that can be charged to retailers by the card companies.
But the current 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. Also, airlines tend to charge around 1p per mile to their co-brand partners and that is unaffordable in the world of capped merchant fees, according to online publication Moneywise.
American Express has lost an 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.
However, Amex cards issued by banks, such as Lloyds Bank Amex Avios Rewards Credit Card, will not be affected as these are already defined as four party cards and subject to fee caps. In a statement issued to Moneywise, American Express says cardholders should continue to use their cards as normal.
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