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Curve Card’s version of what happened with their American Express partnership

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Following on from our coverage of Curve and its split with American Express, the blog post below was published on the Curve website on Thursday morning.

As few of you will find it there by chance, I thought I would reproduce it here.  I have not edited it or added any commentary.

Curve will pay you £10 for trying it out if you use our link.

“January 31, 2019
Bringing Amex Back to Curve
By Shachar Bialick

You are probably aware that American Express has decided to block our customers from adding their Amex cards to Curve and making top-ups to their e-wallets. Amex has given no good or fair reason for their decision and we believe it to be entirely disproportionate and discriminatory to Curve and our joint customers.

Although Amex cardmembers represent a small percentage of our customers, we believe the decision by Amex to be wrong. We believe consumers should be able to decide how they wish to access their money, and that progress should not be stifled by the whims of giants. So we decided to stand for what we believe in: that real innovation can prevail. Curve is an original and groundbreaking product that gives you, the consumer, greater control over your money and we are convinced that this is worth fighting for.

Before I ask for your support of Curve in its fight for innovation and a level-playing field, let me share how this situation with Amex has come about.

Amex First Comes to Curve

In 2016, when we launched Curve in Beta, we accepted Amex cards as one of our funding options, alongside Visa and Mastercard. We soon found out that Amex did not like this operating model, and were promptly told to remove Amex support from Curve. Back then we were a small startup with limited resources and, though disappointed, we were forced to acquiesce and continue to grow our business without them. This was a time before the game-changing PSD2 came into force and regulations did not forbid Amex from doing so.

Although Amex’s market share of total card payments is less than 10% in the UK, it is a leader in the rewards market. Curve cardholders who also have an Amex card represent a small segment of our customers, but for them, Curve can’t be ‘All Your Cards in One’, and they still need to carry two cards in their wallets. Moreover, the bigger problem these users have is that Amex acceptance in the UK and Europe is low, so they can’t use their Amex as much as they’d like to. All of the above explains why many of these customers asked Curve to bring back support for the Amex network.

PSD2 Introduces a Level-Playing Field

In January 2018, the EU’s PSD2 came into law in the UK under PSR 2017, and turned the payments industry on its head. It opened up the payments market to competition and innovation. In particular, it ensured that companies could access all payment networks (including Amex) on a level-playing field along with every other fee-paying and legitimate payment service provider.

As a consequence of this radical change, Curve applied for a new merchant account with Amex and signed a Merchant Services Agreement on the 23rd of March 2018. The Amex team knew the history with Curve but were very happy to start working with us again. In fact the leadership team at Amex Europe were supportive and engaging and we jointly came up with the traditional top-up (prepaid) model approach that Curve launched this week.

In particular, I personally spoke with Amex’s Head of Merchant Services in Europe, who gave his support and endorsement to our plan, understanding that the top-up model they requested differed markedly from how we operate with other card networks. He was happy to have this distinction.

Aside from having a standard merchant agreement with Amex – allowing Curve to accept Amex cards like any other merchant – Curve never had a formal ‘partnership’ with Amex, nor have we sought such an arrangement.

On the 19th of November, we re-launched Amex to a small group of Curve customers, as we do with any product (‘Closed Beta’). It is important to note that the Closed Beta wasn’t part of an agreed roll-out with Amex, nor was there ever a discussion on needing permission from Amex to roll it out to our customer base. Based on the agreement with Amex from March 2018 and the information we had, Curve could have rolled out Amex support to all its customer base in November – when the MVP was ready. The Closed Beta results were remarkable. Around 500 customers topped-up over £1 million in less than a month and their activity on the Curve platform increased by 25%.

Daily communication with Amex employees was nothing but positive and encouraging throughout our Beta launch. They did express a desire to be involved in our launch communication plans and requested a meeting to align communications prior to our wider launch. The meeting was postponed to early January and then moved again at their request to Monday 21st of January. We continued to push back our main Amex launch accordingly, in order to respect their wishes.

The Meeting on Monday 21st of January

The official reason given for this meeting was to discuss Curve’s PR strategy for the main Amex (‘Open Beta’) launch, knowing that we planned to launch shortly. Instead, to our surprise, the Amex team stated that they were unhappy with the Beta, acting as if it were a joint operation. Amex raised concerns over customer experience without giving more details. This flew in the face of the data we had collected and our direct customer feedback.

To be absolutely clear – this was the first time Amex ever mentioned any uneasiness with the integration, and it was never the case that we required Amex approval for the launch. Curve received written approval to launch Amex support in Curve the moment Amex signed the Merchant Service Agreement.

We reminded Amex that strictly speaking we did not have a partnership but rather a Merchant Service Agreement, and if they wished to terminate it, the contract required Amex to give Curve 180 days’ notice. Moreover, we shared our legal opinion that by doing so they might be in breach of payment regulations and could demonstrate clear anti-competitive behaviour if they prevented Curve from accessing the Amex network – as they allow exactly the same functionality to other merchants, such as Paypal, Upay and Yoyo Wallet.

The meeting finished without Amex giving us any formal notice and we agreed to continue the conversation at their offices at a later date.

Amex Launch vol 2

Our launch was planned for Monday 28th January. With this in mind, we decided to regroup to reflect: what would be best for our customers? Should we delay yet once again to an unspecified date, or launch? We decided to move forward with the launch for several reasons. Our Merchant Services Agreement was perfectly valid and our top-up mechanism was known and agreed-upon with Amex. Moreover, our legal advice told us we were protected by regulations, and Amex were unable to prevent Curve from accessing its network.

The first day of the Amex launch was remarkable. Curve customers, especially those who were already Amex cardholders, gave us positive feedback on social media, and spent more than £450,000 on Curve via Amex in one day.

Then, the bombshell. On Tuesday 29th January at 4.46pm UK time, Amex notified us that they were terminating their Merchant Services Agreement with Curve with immediate effect. With that move, and based on legal advice we received, Amex breached their contract with Curve, failed to give appropriate notice, breached PSR regulations, and demonstrated clear anti-competitive and anti-innovation behaviour. Most importantly, Amex seemed to show a total disregard for its own customers’ interests.

Next Steps and What You Can Do to Support Us

We know that without your help we wouldn’t have achieved the heights we have reached to date. With your interests in mind, and our mission to deliver a truly innovative product, we intend to challenge Amex’s decision. We believe financial freedom is the future and we are prepared to fight for yours. This is not really about Curve or Amex; this is about you. It is about putting the customer at the centre and fostering a level-playing field in the financial space.

To be clear, we are not asking you to slander Amex – we are still trying to understand the reasons behind their actions and hope to reach a commercial resolution. We have already sent a letter to them to reconsider their decision and have given them reasonable time to comply. Failure to do so will mean that we will be forced to exercise our rights in the courts and to submit complaints to the relevant regulators in the UK and Europe.

You can support our cause by tweeting to the PSR and FCA, and letting Amex know your thoughts. Explain the benefits you see in supporting Amex in Curve, how it increases competition and choice, and request to review their decision.

We’re sorry for any inconvenience caused to Amex cardmembers, and we hope to resume Amex support in Curve soon. We will update you as soon as we have any further information.”

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Comments (285)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Neil says:
    31 Jan31 January 11:14

    Who knew Emirates wifi was so good! Let’s see a photo or two on Instagram Rob

  • VinZ says:
    31 Jan31 January 11:33

    How very interesting. I’m going to contact Amex today… I gave Amex £4,000 in one day through Curve… why don’t they see the benefit of this?

    • Mark says:
      31 Jan31 January 11:41

      They are seeing an exponential increase in their “exposure” in the rewards market, without any incremental increase in acceptance of Amex by retailers.

      That’s their issue I would imagine.

      • TGLoyalty says:
        31 Jan31 January 12:07

        What did it matter? AMEX is still making their fee and I suspect what’s stopping some of those merchants accepting Amex is the fee they charge mechants.

        I think curve have a point here AMEX have shafted them twice and are trying to stop start ups from using their service. Seems anti competitive to me.

        This is exactly like PayPal and you don’t see Amex pulling out of merchant agreements with them.

        • Dominic says:
          31 Jan31 January 12:21

          I thought that their fees are limited due to EU law? Surely that isn’t an issue anymore?

        • TGLoyalty says:
          31 Jan31 January 12:28

          Interchange fees are just a proportion of the charges. No small merchant is getting near interchange also the non co-branded are excluded

        • Mike says:
          31 Jan31 January 12:34

          Not to be snarky, but: are you an antitrust lawyer?

          Items needed to find an abuse of dominance:

          1. The company needs to be dominant in a relevant product and geographic market. Proving this requires extensive economic evidence.

          2. There has to be an anticompetitive object (intent) or effect (at least potential). To determine this, there has to be an anticompetitive foreclosure, i.e. there has to be a negative impact on the competitive process as a whole. To ascertain this, you need to have solid economic analysis of the appreciable effect on competition (not competitors) in the relevant market – no easy feat, and certainly not something that can be done by mere inference and personal opinion.

          3. Exclusionary abuses (which is what Curve say Amex has engaged in) – if Amex is indeed dominant (point 1) – require the regulator to prove that Amex had the intent to eliminate competition (again, not individual rivals) to its benefit. This requires way more evidence than simply saying “we had an agreement that was torn up.”

          4. In any event, there may be legitimate reasons (objective justification), commercial or otherwise, why Amex might’ve been unhappy with the arrangement. There is no general duty to deal under competition law; actually, freedom of enterprise trumps that except in very narrow circumstances. If there are sector-specific regulations that impose this obligation (such as PSD2, as Curve claim – I’m certainly no regulatory lawyer), then that’s another matter, which has to be dealt with by the appropriate regulator. This may explain why Curve is asking users to reach out to the Financial Conduct Authority and the Payment Systems Regulator, but *not* the Competition and Markets Authority or DG Competition at the European Commission.

          Not taking a position here. Just saying it’d be wise not to throw around concepts like “anti competitive behaviour” lightly.

        • John says:
          31 Jan31 January 12:58

          We don’t know how much Amex was charging Curve in the first place, but assuming it is somewhere close to 0.65%, would Amex rather get 2-4% from the unbranded Amexes at a smaller number of merchants or 0.65% from everyone who takes MC? Then as a small retailer why would you continue to accept Amex at all, just refer any Amex user who comes into your shop to Curve and you get £5

          Paypal charges 3.4% of all transactions (unless you’re very high-volume or on the microtransactions fee scale), while this helps them to fund their guarantee scheme etc., they must still be passing on a lot more than 0.65% to Amex.

        • Craig says:
          31 Jan31 January 14:52

          If merchants stop accepting amex it WILL cause an issue for Amex long term, even if consumers still spend the same amount on amex via curve. Especially smaller merchants would stop accepting Amex directly if they knew people would just pay with Curve. Fast forward a number of years and a significant* portion of Amex spend is being done via Curve, then curve darken the Amex door and say we are now a key part of your business and we want a reduction in the “merchant fees” charged to top up curve amex wallet. Amex then have no choice but negotiate fees or lose a portion of their revenue as the underlying merchants now don’t accept amex direct.

          Curve is brilliant but it is a long term disrupter to the Amex business model. Just like if black cabs could have done something to stop uber, they would have. Amex being cynical here i think, at least that is my view of it

          *make your own mind up about what is significant. I’d suggest even 5% of Amex spend going via curve would be material enough for curve to push hard on fees.

  • Steve says:
    31 Jan31 January 11:44

    Curve are struggling to raise new funds and are running out of cash fast – seems like a desperate ploy by the CEO to try and convince investors that there’s a chance the product can be profitable in the future if they win a speculative court battle… hopefully those who paid for the new cards get a refund before the company goes under.

    • Thomas Howard says:
      31 Jan31 January 11:58

      If you paid up front for the year using a credit card you should be able to get your money back via S75 protection: https://www.which.co.uk/consumer-rights/regulation/section-75-of-the-consumer-credit-act

      I’m resisting because it’ll probably cause them more problems but no response to a support ticket since Monday is slightly annoying me.

      • Alan says:
        31 Jan31 January 13:21

        They’ve confirmed 14 days (statutory) plus an extra 14 days thereafter to request cancellation and refund if you subscribed.

    • BlueHorizonUK says:
      31 Jan31 January 11:59

      Backed by Santander and have zero debt

      • Steve says:
        31 Jan31 January 12:12

        Start-ups backed by the venture capital arms of corporates fail regularly. Santander have no obligation to step in and save Curve.

      • Tom says:
        31 Jan31 January 12:50

        As stated on the other page(s) where this comment has been made (including at least once by Blue Horizon). Santander Ventures is 1 of 7 corporate investors, plus 10 individual investors that we know of. Lots of Banks have these labs/funds, and they are nothing new (Marissa Mayer worked for UBS labs long before Google and Yahoo), and they are all isolated from the core business. Santander Ventures are/were a $200m fund, so have invested less than 1% of their resources in Curve. I doubt they, let alone Santander Management would bat an eyelid if Curve went to the wall.

      • Symon says:
        31 Jan31 January 14:14

        Do you work for Curve? Because what you’ve said is BS; Santander InnoVentures is one of many investors in Curve. This does not mean Santander Group will bail Curve out.

        • Nonsense says:
          31 Jan31 January 18:42

          Exactly – even Rob suggested Santander’s interest was a safety net. Utter BS.

      • AG says:
        31 Jan31 January 16:06

        Your claim that Curve is backed by Sanatnader is completely false as explained above. Moreover, it is a dangerous game to use other brands to give your own brand some credibility. This sort behaviour clearly explains American Express’s concerns.

      • Mr Dee says:
        31 Jan31 January 19:24

        Zero debt? Doesn’t that mean they must have made a profit at some point?

        • Doug M says:
          31 Jan31 January 21:04

          No, it means they’ve spent a lot of investor cash, but have a little left.

  • BlueHorizonUK says:
    31 Jan31 January 11:59

    From someone at Curve:

    Thanks for your comment. To be clear: the request to do top-up came from Amex. We wanted to operate like we do with Mastercard and Visa.

    We took 6 months to build the top-up functionality in the front-end and back-end to accommodate this.

    • Ian M says:
      31 Jan31 January 12:09

      It’s surprising the top up model idea came from Amex. Why would Amex want to go down that route when it means they lose all data on customer’s spend habits? It makes no sense. It means Amex are blind to customers using Curve as a way to do blatant manufactured spend.

      If Curve had been a big success and had a large chunk of the market, it would mean Amex losing a huge amount of data on customer spend habits.

      It makes far more sense to me for Amex to have been used exactly the same way as visa and MasterCard, with the data from each transaction being provided to them.

      Does anyone have any insight as to why Amex wanted the top up model instead!?

      • SimonW says:
        31 Jan31 January 12:15

        Was it sold to Amex as a way to use Amex at small retailers – not accepting amex – lots of piddly trades to process…. Lets just keep it simple. Minimum £100 top up?

        Was it sold to Amex as way to use Amex for 0% FX fees – obviously foreign retailers – Do amex want that hassle?

        Maybe not. OR maybe Curve are making it up as they go along

        • John says:
          31 Jan31 January 13:20

          If Amex wanted to remove their FX fee they could easily do so any time, at least for the non-branded cards.

  • Alex W says:
    31 Jan31 January 12:25

    Based on that post it still sounds like Curve took a big risk by going ahead after Amex had expressed “concerns”.

    It seems unlikely that Curve and Amex could come to an amicable arrangement if they pursue it in the courts. I guess the courts can’t force Amex to reopen the merchant services agreement? Or if they could, then Amex could just terminate it with 180 days notice anyway.

    • Federico says:
      31 Jan31 January 12:32

      completely agree with you. they have raised concerns but Curve decided to go ahead anyway with the public beta. Amex isn’t bully anyone but as a normal relationship if something doesn’t work you just stop it and they did.

  • xcalx says:
    31 Jan31 January 12:44

    “This is not really about Curve or Amex; this is about you.”

    Really.

  • Adam says:
    31 Jan31 January 12:45

    My view on this (and I have been a Curve customer since 2016) is that American Express are acting within their right to protect their image, market proposition and -of course- profitability. As with any organisation of this size, decisions like this must be thoroughly reviewed, and it seems clear to me that Amex asked Curve not to launch until a decision has been made. Then Curve got too excited and decided to launch regardless.

    I will continue carry my free Curve as a spare card I must say it will never become my main card due to:

    1. Higher decline rate compared to any other card.
    2. Slow support at best of times.
    3. Their extremely complex FX policy.

    • Tom says:
      31 Jan31 January 13:05

      Quite right, plus of the few AMEX UK Merchant Services Agreements I have seen, all give AMEX the right to immediate termination, and all forbid the unauthorised use of their Brand for marketing purposes (i.e. you can show you accept AMEX, though cannot appear affiliated in any way).

      Adding “/en-gb/amex ” to the curve.app website (wasn’t sure if Rob blocks URLS) shows Curve were blatantly leveraging the American Express brand for their own benefit.

      The suggestion that AMEX are signed up to an agreement that forces them to continue processing payments to a Merchant for 180 days, regardless of that Merchant’s behaviour, is ludicrous.

      Complaining that AMEX were “acting as if it were a joint operation”, when Curve were building web pages like that, showing an American Express Gold Card within the Curve App, only goes to support many of our suspicions that Curve were using the brand without proper authorisation.

    • Symon says:
      31 Jan31 January 14:03

      +1

    • Alex Sm says:
      1 Feb1 February 20:02

      I used to pay with Curve abroad because it was the best FX card. But since MBNA issued its generous and simple offer in the form of MBNA horizon why would people bother about anything else???

  • Andy says:
    31 Jan31 January 13:02

    The thing I really don’t understand about all of this is American Express’s reasoning that they are worried about the “Cardmember Experience”. Just what was their actual concern?

    As far as I’m concerned, Curve was a significant improvement on my Amex Cardmember Experience, because it FINALLY meant that I didn’t have to get frustrated at retailers not accepting my Amex (particularly on the regular occasions when I didn’t have any say in where I ended up going, like meeting friends for dinner).

    The only thing I can possibly think of is that Amex are concerned that Curve are simply not good enough at customer service – particularly with regards things like disputed transactions. In that regard, from my recent experience I don’t think it’s unreasonable to say that I also have serious concerns. That isn’t impossible for Curve to fix though – they just need to employ enough people to do the job properly.

    • Shoestring says:
      31 Jan31 January 13:30

      ‘Cardmember experience’ is just a nice ambiguous expression that doesn’t specifically accuse Curve of anything – yet can cover plenty, esp bringing Amex into disrepute (eg cheating on the regulation that says you can’t pay off a credit card balance using another credit card).

    • Tom says:
      31 Jan31 January 13:43

      Side rant – why do some fans, and Curve, keep comparing Curve to Paypal?

      Paypal:
      – Is a licensed bank in the European Union and subject to PRA regulation
      – Handle their own transactions, monitor extensively for money laundering/fraud, offer their own payment protection (I have disputed several transactions funded by AMEX directly with Paypal)
      – Does not allow cash withdrawals from AMEX, cash loading to AMEX, and vet merchants (many types of products / services that can’t be paid for with Paypal, closely aligned to AMEX policy)
      – Does not promote itself using the AMEX brand

      In contrast Curve:
      – Avoid regulations / lisences where possible (stated corporate strategy)
      – Outsource all transactions (and control thereof) to a third party supplier
      – Have a total staff of 50 people yet were responsible for £450,000 of Amex payments in one day
      – Uses the AMEX brand extensively for their own benefit (or was launching a new premium product, with the first listed feature being unlimited AMEX spend, on the same day as rolling-out AMEX functionality, a coincidence….)

    • Tom says:
      31 Jan31 January 13:56

      Apologies above wasn’t meant as a direct reply

    • Alex Sm says:
      1 Feb1 February 20:03

      Maybe refunds?

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