Merchant steering has long been one of the most debated issues in the payments industry because it sits at the intersection of competition, merchant costs, and consumer choice. Payment networks invest heavily in building valuable cardholder rewards and premium brands, while merchants seek greater flexibility to encourage the use of lower-cost payment methods. As legal and regulatory scrutiny has increased, court decisions have played a significant role in defining how merchants can communicate payment preferences at the point of sale.
The court ruling involving American Express represented a significant moment in the ongoing debate over merchant steering. By allowing merchants greater freedom to promote alternative payment methods, the decision had the potential to reshape negotiations between merchants and payment networks while influencing how consumers choose to pay at checkout. The outcome also underscored the broader tension between preserving network value and fostering greater price competition within the payments ecosystem.
As if merchants and issuers didn’t have enough to think about this year, a recent court ruling has introduced a new wrinkle: merchants will now be able to steer consumers away from using American Express cards at the checkout counter:
“The change comes after a federal judge in February found that AmEx’s rules on the matter were anticompetitive; a separate court this week denied the company’s request to keep the rules in place pending its appeal.”
“That means starting next month, merchants will be able to offer discounts or rebates to customers paying with a card from Visa Inc. or MasterCard Inc. or display signs showing which card brand they prefer. Visa and MasterCard also could negotiate lower fees with certain merchants in exchange for the merchant agreeing to steer customers toward their cards.”
The evolution of merchant steering policies highlights the continuing effort to balance competition, merchant economics, and consumer experience. Greater flexibility for merchants may encourage increased price competition among payment networks, particularly as issuers seek to maintain transaction volume while controlling acceptance costs. At the same time, consumers may encounter more incentives and messaging designed to influence their payment choices during the checkout process.
Although legal challenges surrounding merchant steering have continued to evolve over time, the underlying issues remain highly relevant across the payments industry. Court rulings, regulatory actions, and competitive pressures will continue to shape how merchants, payment networks, and financial institutions interact. As payment options expand and acceptance strategies become more sophisticated, merchant steering is likely to remain an important topic for both retailers and card issuers.
Overview by Alex Johnson, Sr. Analyst, Credit Advisory Service at Mercator Advisory Group
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