Why merchants suffer just as much as consumers do (Part I)

Around the turn of the century, American Express began putting into place more aggressive strategies of extrapolating data and massaging it to "paint any picture" it preferred. This is a serious threat not only to the consumer, but also to the accepting merchants of the card.

American Express has a unique advantage in the credit card world—as does Discover to a smaller extent—because it generally operates in a "closed loop" business environment.  Unlike American Express, however, VISA and MasterCard rely on banks for issuance of cards, merchant acceptance, and processors to capture data.  This dependency severely weakens their ability to model consumer spending. Simply put, because American Express owns the card member relationship, the merchant relationship, and the data processing through its own infrastructure (no third party processor reliance), it is able to track spending and build behavioral models from all angles of the business.