Visa and MasterCard’s push to boost payments to their partner banks amounts to a major counterpunch to American Express’s efforts to gain a foothold in the bank card market, Morgan Stanley analysts indicated Tuesday.
In report entitled “The Empire Strikes Back,” Morgan Stanley analysts said Visa and MasterCard’s higher payments, called interchange fees, “should take away most of the incentive for banks to partner with AmEx.”
Merchants pay interchange fees to banks offering credit cards to help offset some costs of issuing those cards. The higher interchange fees also help sweeten the pot for MasterCard and Visa’s network banks and give them fewer incentives to partner with American Express, according to the analysts.
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