NEW YORK - American Express Co. has ended another round of litigation with a rival, but still faces serious headwinds from its customers.
After saying yesterday that it will be getting $1.8 billion from MasterCard Inc. in settlement of an antitrust suit, the credit card lender revealed it has again underestimated how quickly its cardholders are falling behind.
"Business conditions continue to weaken in the US, and so far this month we have seen credit indicators deteriorate beyond our expectations," AmEx chief executive Kenneth Chenault said.
The rocky consumer climate comes amid a tough legal period for credit card companies, which are battling among themselves and with authorities around the world over rules and fees. Yesterday's settlement was seen by industry experts as positive for both companies - mainly because the figure was close to expectations, and because the companies can now move on.
American Express had accused the Purchase, N.Y.-based credit and debit card processor of conspiring to discourage banks from issuing its credit cards.
MasterCard said it agreed to make 12 quarterly payments of $150 million to American Express, and plans to book a $1 billion charge related to the settlement in the current fiscal quarter.
"We are pleased to have reached a settlement that will enable us to keep our strong balance sheet intact," MasterCard chief executive Robert Selander said.
American Express reached a similar settlement with Visa Inc. last year for $2.7 billion.
The company will receive about $800 million a year for three years from the two settlements, but many investors remain worried about consumer debt trends.