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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.

  • David S says:
    31 Jan31 January 13:14

    Email from Curve saying we’ll get an additional 14 days to the 14 day statutory cooling off period should we want to cancel Metal.

    However, if we do cancel Metal, the card itself will be blocked.

    Slightly disappointing. I must admit I had wanted to receive the Metal card and then cancel, on the chance the Metal card would continue to operate as a standard black card.

    • Alan says:
      31 Jan31 January 13:24

      I’m afraid they’ve always been clear that a metal card would only be valid with the corresponding sub and any downgrade would lead to a new card being issued.

  • Simon says:
    31 Jan31 January 13:26

    Thinking ahead, if this ends up with the PSR rather than in court –
    – What’s the PSR’s form for supporting start ups vs incumbents and on open access etc?
    – How quickly can they adjudicate?

    • Shoestring says:
      31 Jan31 January 13:40

      As soon as Amex provide evidence that Curve was allowing people to pay off their Amex bill using another credit card, Curve will be laughed out of adjudication with their tail between their legs.

      • Tom says:
        31 Jan31 January 14:06

        +1 (and that’s just 1 weakness in their case)

      • Andy says:
        31 Jan31 January 14:21

        I don’t understand this constant assertion that Curve is all about paying off one credit card with another credit card.

        As far as I’ve ever been aware, using a Curve card to pay a financial institution was always banned (they certainly never let me do it); and even after the change, it was only permitted to use Curve to pay credit card bills if you used an underlying debit card, not a credit card.

        Perhaps some erroneous transactions slipped through the net, but as far as what was actually allowed is concerned, it seemed very clear to me and anyone paying a credit card with a credit card was not acting in accordance with their agreement.

        • Shoestring says:
          31 Jan31 January 14:51

          You’re right that Curve ‘outlawed’ doing this but they did nothing to enforce the rule.

          I don’t think many people see Curve’s purpose (as far as they were concerned) as being *primarily* to pick up more points when they settle credit card bills on another (reward) credit card – some might – but it *was* an aspect of Curve’s operation that must have got Amex worried.

          To ignore it would be like a bank saying: ‘we know that 1% of our customers’ transactions are money-laundering – but the other 99% are completely above board so we can ignore the bad apples’.

        • Ian M says:
          31 Jan31 January 17:13

          Not only did Curve not enforce the rule about paying financial institutions with the card, they actively promoted the product to the very audience that are most likely to do just that. This website has been full of people talking about paying off their credit card with another credit card using Curve.

          So, Amex could see that Curve do not enforce the rule, and due to the top up system for Amex use with Curve, Amex were blind to what their customers were using the Curve card for with the funds pulled from their Amex card. For this reason alone it would be completely irresponsible of Amex to continue to work with Curve in the current format.

      • Anna says:
        31 Jan31 January 16:30

        Someone made a good point on the Curve Community forum that every time someone does a balance transfer they are paying off one credit card with another one!

        • Chrisasaurus says:
          31 Jan31 January 17:30

          +1

        • Shoestring says:
          31 Jan31 January 18:53

          Spot the difference:

          With balance transfers, the new credit card co is proactively approving the transfer of debt from one card to another after having run a credit check on the new cardholder.

          With Curve letting credit card #1 pay off the balance on credit card #2, they are colluding in the deception that hides this ‘cheating of the rules’ from both credit card cos #1 *AND* #2, for both have forbidden it as a condition of card membership.

        • Anna says:
          31 Jan31 January 19:16

          It was a comment on consumer financial behaviour, not Curve. For someone like me who doesn’t carry a cc balance (unless it’s on an interest free card), the method I use to pay my bills isn’t going to lure me into unmanageable levels of debt. I was under the impression that this is the reason that paying one card against another is discouraged?

          Shoestring, you are loving an argument this year!

        • will says:
          31 Jan31 January 19:33

          Correct, the difference is the CC company issuing the credit is consenting to it. In the case of charging a credit card repayment to your Amex, it’s not something Amex consent to.

        • John says:
          31 Jan31 January 20:12

          BTs tend to have a fee though. I don’t recall any BTs which have 0% fee unless they charge interest (at a low rate like 4.9% or something)

        • Doug M says:
          31 Jan31 January 21:15

          Yeah but at an extreme level you have two cards through Curve, say IHG and Virgin. You spend on Virgin earning 1.5 FC miles, throughout the month you pay the Virgin card from the IHG earning 2 IHG points. Virgin statement comes and you pay off final amount using IHG. You then start to pay IHG from the now clear Virgin one. Essentially it’s endless free FC miles and IHG points, and an increasing debt level, to the point of credit limits assuming you’re careful. You can effectively spend and then maintain a permanent debt to the lower of the two credit limits, continually earning miles by shifting the debt from one to the other. You have free balance transfer, free loyalty points, and endless interest free period on the debt. Whether they had rules or not, Curve have enabled this behaviour. Given the subsequent fallout of PPI, can you see how this would be viewed when the less able and more desperate have really muddled it all up.

        • Doug M says:
          31 Jan31 January 21:16

          Meant to add, why would Amex want to get involved with the likes of Curve.

        • Brian W says:
          31 Jan31 January 22:13

          To back up what Anna has pointed out, I still use my old Lloyds Duo Avios Card to balance transfer all my other Credit card (inc all Amex ones) balances every month – before paying of the amount transferred the following day. I get 1500 Avios per £1,000 transferred. Its worth over 100k Avois a year and costs me nowt. Makes me more than Curve will any day.

          Dreading the day I get my letter from Lloyds..

        • Doug M says:
          1 Feb1 February 08:15

          @Brian W – Nice. But that’s a legacy product, and they’re offering you a balance transfer facility based on their risk assessment of you. People are using Curve to take advantage of something that is against the rules, and Curve are doing little to stop it. Shoestring lays it out a few posts back.

        • Alex Sm says:
          1 Feb1 February 20:04

          And even getting rewards on that, like with IHG cards

    • Andrew (@andrewseftel) says:
      31 Jan31 January 14:42

      It’s not clear to me that Curve is a Payment Services Provider that would get the Regulation 103 protection supporting its access to the Amex network. Unlike the Paypal, Upay and Yoyo Wallet examples they cite, the FCA register doesn’t show Curve 1 Ltd holding the permissions they would need to achieve the PSP definition that PSR uses.

  • Callum says:
    31 Jan31 January 15:03

    So Amex specifically told Curve to stop accepting Amex, yet they decided to just launch anyway because they’ve been waiting a long time?

    I certainly get their frustration, but that directly contradicts their claim that it came out of the blue.

    Then all the talking about how Amex is just a small part of Curve that not many people are interested in is just a blatant lie. That was one of their key selling points to start with and again, it’s one of their key selling points on the new cards. Not to mention them talking about the vast sums people started putting through immediately when they got access.

    A bizarrely dishonest summary given the commendable detail they’ve otherwise given.

  • Evan says:
    31 Jan31 January 15:10

    Basically – as long as everyone gets any money back that they’ve paid out for metal or black, and any money they’ve left in the top up wallet – WHO CARES!?

    • matt says:
      31 Jan31 January 15:18

      Curve care – because the chances of them not going bust are pretty slim now. This post has not made me any more sympathetic to them.

      I care – because they have come up with a useful underlying product (albeit covered with rubbish in the form of useless insurance products) that is not going to see the light of day for very long.

    • Shoestring says:
      31 Jan31 January 15:18

      I care about Amex being incorrectly dissed – it’s simply not cricket! 🙂

    • Andy says:
      31 Jan31 January 15:20

      It’s not about the money, it’s about trust.

    • Steve says:
      31 Jan31 January 15:32

      There’s a significant possibility that this is the end for them and people don’t get their money back…

      • Rob says:
        31 Jan31 January 16:21

        How? The company has zero debt, a couple of million still in the bank and a wage bill which I doubt is higher than £150k per month. Start-ups don’t go bankrupt overnight because start-ups don’t have any debt. They might run out of funding but that is a slower process.

        • Thomas Howard says:
          31 Jan31 January 19:17

          The big questions is how much are they paying in transaction fees? They *could* be paying 1% in merchant/handling charges on everything we put through the cards which would burn through their £3m pretty quick.

        • Tom says:
          31 Jan31 January 19:29

          Per below thread I think there a few big questions. I suspect the wage bill is well north of £300k a month. How are they funding £10 referrals for each new customer, how are they going to cover the cost of metal cards people no longer want, etc. And who on earth is going to extend them credit? (Please don’t say Santander, I just can’t take it anymore)

        • John says:
          31 Jan31 January 20:01

          As for the £10, Curve rewards is currently “suspended” unless you are able to revert to an older version of the app. (I can’t be bothered to try as I only have 1p there)

  • Evan says:
    31 Jan31 January 16:34

    Yeah right. I think most folks won’t lose too much sleep if they get their cash back!

  • Chris says:
    31 Jan31 January 16:46

    This cooling off period, how do I actually get my £150 back, as they are not responding to my requests?

  • Tom says:
    31 Jan31 January 17:37

    Agree it is unlikely to happen overnight Rob, though where on earth do you get that salary number?! They have 84 employees on Linked In – so based on that you think the average employee salary is sub £1,600 a month (NIC considered)?

    Revolut might be a different business model, but for context they had annual costs of £27.6m in 2017, 4 x # of employees, 5 x # of customers, and no flashy metal card production at that stage!

    Whilst I appreciate slating their business with made up numbers is bad, propping-up their business with made up numbers is no better!

    • Ted says:
      31 Jan31 January 17:56

      Rob has this small conflict of interest with Curve. Yes, it’s very small, but like all cognitive biases, it will subtley affect his objective view of the product, as well as obviously limiting what he is likely to say publicly.

    • Rob says:
      31 Jan31 January 18:18

      Last time I went round they had about 15 staff, I clearly didn’t gross it up enough!

  • ge0rge says:
    31 Jan31 January 18:23

    I’m not sure if we are to trust everything they say, or at least they are not too accurate.
    For example :’Curve cardholders who also have an Amex card represent a small segment of our customers’. How do they know? I didn;t want to be too harsh on Curve, even after Tuesday’s news, but this last PR/post made me doubt them a bit.

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