Amex debit card in works

NEW YORK -Testifying recently in the Justice Department's antitrust suit against Visa and MasterCard, Kenneth I. Chenault, president and chief operating officer of American Express Co., said that his company is interested in offering an offline, signature based debit card, "that would be priced lower than Visa and MasterCard" but had no strategy to release it because the banks fear they could lose access to the associations' ATM networks, Cirrus and Plus. "I would like to give our customers a choice of debit products," Chenault said. He said that MasterCard and Visa rules stand in the way of Amex offering a viable debit product. According to Chenault, his company's goal is to get bank card issuers to issue American Express cards in addition to Visa and MasterCard, to increase transaction volume over the Amex network. The bank pitch is that their profitability will increase because Amex charges merchants a higher fee and Amex customers generally spend more on their cards. Lawrence Popofsky, a Visa attorney, challenged Chenault's version of events citing Amex's recently launched online bank, Membership Banking, with about 30,000 customers who have access to online debit cards as proof that the company has the opportunity to increase its market share in many ways that do not involve partnerships with U.S. banks. Popofsky then contended that Amex had its own exclusionary rules, such as the co-branding deal between American Express and Costco, the retailer cannot accept any other card brands at its stores. Chenault said the rule was made at Costco's request but when pressed as to the reasons behind the brand exclusion, Chenault said he did not know the full details of the contract.