A recent European court ruling could have significant implications for airline, hotel and retail co-brand card programmes.

Illustrative image created using AI. This blog is independent and is not affiliated with or endorsed by American Express, KLM or any EU institution.

A recent Dutch enforcement action concerns the Amex–KLM Flying Blue co-branded credit card programme. On 16 April 2026, the Court of Justice of the European Union (CJEU) held that payments and incentives made by a three-party card scheme such as Amex to a co-branding partner could constitute implicit interchange fees, even where the co-branding partner is not technically the card issuer.

What led to the case

Amex and KLM operated a co-brand arrangement under which Amex issued Flying Blue cards and paid KLM several forms of remuneration.

The Dutch Authority for Consumers and Markets (ACM) concluded that these payments collectively exceeded the EU consumer credit interchange cap of 0.3% of transaction value. In March 2019, it ordered Amex to comply, backed by a penalty of €500,000 per day up to €10 million. The Rotterdam court subsequently annulled the ACM’s decision, finding that the authority had not adequately demonstrated that the payments had an equivalent object or effect to interchange. The Dutch appellate tribunal (the College van Beroep voor het bedrijfsleven) then referred a series of interpretative questions to the CJEU.

What the CJEU decided

1. A co-brand partner need not be an issuer

Ordinarily, Amex is a three-party scheme because it issues the card and acquires the merchant transaction itself. But the EU Interchange Fee Regulation treats a three-party scheme as a four-party scheme when it issues cards with a co-branding partner.

The CJEU confirmed that the co-branding partner does not have to perform the technical or regulated function of card issuing. Payments received by a non-issuer co-branding partner may still be “net compensation” for IFR purposes.

2. The payments are not automatically capped

The Court did not say that every payment to KLM automatically constitutes interchange.

Instead, Article 5’s anti-circumvention test applies: the payment must have an object or an effect equivalent to an interchange fee. These are alternative tests. Establishing either one is sufficient.

The relevant consideration is whether the payment creates an incentive comparable to conventional interchange, particularly by encouraging consumers to obtain or use the card. Payments linked to transaction volumes, card expenditure, loyalty rewards, bonuses or other usage incentives are therefore particularly exposed.

3. Genuine services can be deducted

Amex may deduct the real economic value of monetary and non-monetary services provided by KLM in return, for example, brand rights, marketing support or loyalty programme access.

However, the value must be the actual economic value, supported by evidence. The parties cannot simply assign a high contractual value to those services to reduce the apparent net compensation.

4. KLM’s merchant service charge cannot be offset

KLM also paid Amex merchant service charges when accepting Amex cards. The Court held that these charges cannot be deducted from the remuneration paid to KLM under the co-brand agreement.

The two flows arise from separate legal relationships:

• KLM as a merchant paying its acquirer

• KLM as a co-branding partner receiving remuneration from Amex

• 
  

They cannot be netted merely because the same two companies are involved.

Why the judgment is significant

Co-brand economics will require much more detailed attribution

Schemes and partners will need to classify every payment and benefit within a co-brand arrangement:

• Which amounts remunerate genuine marketing, data, brand or loyalty services?

• Which amounts are driven by account openings, spend or transaction volume?

• Who ultimately funds cardholder rewards?

• Does a payment encourage greater card usage?

• What independent evidence supports the value attributed to services and loyalty points?

  
  

A single headline “partnership fee” will no longer be sufficient. Contracts, management accounts and programme P&Ls will need to separate service remuneration from payments functioning as card-use incentives.

Loyalty programmes are directly exposed

The judgment is particularly important for airline, hotel and retail co-brands. Loyalty miles or points are not outside the interchange regime merely because they are purchased as a separate product.

Their genuine economic value may be deducted, but regulators and courts can investigate:

• the external selling price of the points

• marginal versus retail cost

• breakage assumptions

• redemption costs

• marketing value

• whether the purchase price includes an additional incentive payment to the partner

  
  

The Court’s insistence on “real economic value” makes independent valuation evidence important.

Amex may have to change some European programme economics

The eventual commercial consequences could include lower co-brand partner payments, reduced reward earn rates, smaller welcome bonuses, greater partner funding of rewards or higher cardholder fees. That is an inference rather than a direct requirement of the judgment. The precise effect depends on which payments the Dutch court ultimately classifies as interchange-equivalent.

The ruling strengthens the anti-circumvention principle

The important policy message is that the 0.3% cap cannot be avoided simply by directing interchange-like value to a co-branding partner rather than to a separately licensed issuer.

Although the judgment directly concerns an Amex three-party structure, its functional approach could also interest Visa and Mastercard issuers, particularly where scheme incentives, issuer rebates and onward payments to co-brand partners are economically connected. Visa and Mastercard were parties to the Dutch appellate proceedings, reflecting the broader industry significance.

Potential historic exposure

Because the CJEU was interpreting provisions that have applied for several years, regulators may examine existing or historic co-brand arrangements rather than only new contracts. Any actual recovery, penalty or retrospective adjustment would still depend on national enforcement powers, limitation periods, legal certainty and the particular evidence.

What the ruling does not do

It does not finally determine that every Amex payment to KLM breached the 0.3% cap. The CJEU provided the legal interpretation. The Dutch appellate court must now apply that test to each category of remuneration and determine its real economic value.

As of the Dutch judiciary’s 17 June 2026 case tracker, no final post-reference judgment from the College van Beroep voor het bedrijfsleven was listed.

It also does not remove the exclusion for genuine commercial card transactions. The EU interchange caps apply to consumer debit and credit cards. Transactions using qualifying commercial cards remain outside those caps. Although the Amex–KLM relationship included corporate cards, the principal 0.3% issue concerns consumer-credit transactions.

UK implications

The April 2026 judgment is not binding on UK courts because it post-dates Brexit, although UK courts may have regard to later CJEU decisions.

Nevertheless, it is potentially persuasive because the UK’s assimilated Interchange Fee Regulation contains substantially similar concepts: three-party schemes, co-branding, net compensation and the Article 5 prohibition on circumvention. Existing PSR guidance also recognises that three-party schemes issuing cards with co-branding partners may fall within the capped regime.

The ruling is commercially important. It gives regulators a strong legal basis to investigate co-brand payments as implicit interchange, but still requires a granular economic assessment of each payment, the incentive it creates and the genuine value of services supplied in return.

Sources:

• CJEU judgment, Case C-549/23

• Advocate General’s Opinion, Case C-549/23

• Regulation (EU) 2015/751

• Dutch CBb reference, ECLI:NL:CBB:2023:453

• Rotterdam judgment, ECLI:NL:RBROT:2021:13747

• CJEU judgment, Case C-304/16

• PSR UK IFR guidance

PaySavi advises clients on compliance and regulatory requirements for card and other payment service providers. Learn more about our payments consultancy services.

Learn more