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> But the Fed stuck in a loophole for Discover. And that is leading Capital One to buy it. This isn’t a “loophole”. It’s the difference between open-loop paym
by tiffanyh 3y ago
> But the Fed stuck in a loophole for Discover. And that is leading Capital One to buy it.
This isn’t a “loophole”.
It’s the difference between open-loop payment networks and closed-loop.
Visa/Mastercard are open-loop.
Whereas Amex & Discover are closed loop.
On closed-loop, both the issuer and acquirer is the same bank (Discover).
It’s way easier for a merchant to not accept closed-loop than it is open-loop, because they can just elect to not get an acquiring account at that bank (Discover).
This is why Amex and Discover have always been more expensive for a merchant to accept than Visa/Mastercard.
This article is way longer that it should be and it sensationalizes a fairly well known and simple difference.
- jrockway 3y agoIs Amex completely closed loop? When I worked at Bank of America circa 2010 we issued an Amex card. No idea if that is still a thing or not.
- kyawzazaw 3y agoThe article addresses this. US Bank issues an Amex card right now. https://www.americanexpress.com/en-us/network/us-bank/flexperks/credit-cards/select-plus.html https://www.americanexpress.com/en-us/network/us-bank/flexpe...
- bena 3y agoIt could still be closed loop. JPMorgan has ChaseNet, a closed loop system and it issues Visa and Mastercard cards. It was mostly rules from Visa and Mastercard that prevented American Express from being offered by more banks.