American Express says it nixed foreign transaction fees on certain cards to build loyalty among their cardholders, many of whom are frequent business travelers.

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The transaction fee (also known as the discount fee) is the commission charged to merchants as a percentage of the dollar value of transaction on American Express cards.

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Visa and Mastercard charge a 1 percent foreign transaction fee, American Express charges 2 percent, and the companies issuing the cards can add fees of their own.

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The transaction fee on American Express cards has reduced from over 2.23% in 2005 to current levels of around 2% and given the increasingly competitive landscape, the trend is expected to continue well into the future.

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We are writing to express our extreme disappointment regarding the proposed go-private transaction, which we believe grossly undervalues the Company.

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Notably, American Express, the card company regarded as wringing the highest transaction fees out of merchants and their customers, refused to settle with the DOJ.

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An increase in retail spendings indicates sound consumer health and rising transaction volumes for payment network providers such as MasterCard and competitors like Visa, American Express, Discover and Capital One.

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