Document ID: ./input/supremecourt_opinions/opinions/17pdf/16-1454_5h26.pdf
Page Number: 10

6 

OHIO v. AMERICAN EXPRESS CO. 

Opinion of the Court 

Amex  competes  with  Visa  and  MasterCard  by  using  a 
different  business  model.    While  Visa  and  MasterCard 
earn half of their revenue by collecting interest from their
cardholders, Amex does not.  Amex instead earns most of 
its  revenue  from  merchant  fees.  Amex’s  business  model 
thus  focuses  on  cardholder  spending  rather  than  card- 
holder lending.  To encourage cardholder spending, Amex
provides  better  rewards  than  other  networks.   Due  to  its 
superior  rewards,  Amex  tends  to  attract  cardholders  who
are wealthier and spend more money.  Merchants place a
higher  value  on  these  cardholders,  and  Amex  uses  this
advantage to recruit merchants.

Amex’s  business  model  has  significantly  influenced  the
credit-card market.  To compete for the valuable cardhold-
ers  that  Amex  attracts,  both  Visa  and  MasterCard  have 
introduced  premium  cards  that,  like  Amex,  charge  mer-
chants  higher  fees  and  offer  cardholders  better  rewards. 
To  maintain  their  lower  merchant  fees,  Visa  and  Master-
Card have created a sliding scale for their various cards—
charging  merchants  less  for  low-reward  cards  and  more 
for high-reward cards.  This differs from Amex’s strategy,
which is to  charge merchants the  same fee no matter the
rewards that its card offers.  Another way that Amex has
influenced  the  credit-card  market  is  by  making  banking 
and  card-payment  services  available  to  low-income  indi-
viduals,  who  otherwise  could  not  qualify  for  a  credit  card 
and  could  not  afford  the  fees  that  traditional  banks 
charge.  See  2  Record  3835–3837,  4527–4529.    In  sum, 
Amex’s  business  model  has  stimulated  competitive  inno-
vations in the credit-card market, increasing the volume of 
transactions and improving the quality of the services.

Despite  these  improvements,  Amex’s  business  model
sometimes  causes  friction  with  merchants.    To  maintain 

—————— 

Discover  uses  banks  that  cooperate  with  its  network  to  interact  with  

merchants.