Card Wars : Visa Deal Has American Express Fuming

The Chef won’t take The Card anymore--and American Express is mad.

In its latest skirmish with Visa, American Express has accused its rival of striking a secret deal with celebrity chef Wolfgang Puck. American Express says Puck agreed to drop its card at two restaurants in return for “millions of dollars in advertising� from Visa for Puck’s Malibu restaurant, Granita. Visa plans to run television ads beginning next week saying Granita won’t accept the American Express card.

A spokesman for Puck acknowledged the deal with Visa, but said that the famed chef--who did for pizza what Evian has done for water--had planned to drop the American Express card anyway.

“It costs us twice as much (as Visa) to take the American Express card,� said Tom Kaplan, managing general partner of Spago, Puck’s trendy pizzeria on Sunset Boulevard, which stopped accepting the American Express card Dec. 1. “Like everyone else, we are constantly faced with having to control our costs, and this is a cost we can control.�

Said Visa spokesman Gregory Holmes: “We don’t have to pay merchants not to accept American Express.�

American Express launched its attack via advertisements appearing in Friday’s editions of the Los Angeles Times, the San Francisco Chronicle and two entertainment industry journals, Daily Variety and the Hollywood Reporter. In its ad, American Express not only fired at Visa, but took a shot at Puck as well, advising readers to “consider the thousands of other fine restaurants in the Los Angeles area that gladly welcome American Express.�

The episode underscores the intensity of the competition for consumer charge dollars between Visa and American Express. In the last two years, Visa has been aggressively pursuing trendy restaurants and upscale merchants--typical American Express customers--in a bid for prestige and more corporate charge business. Meanwhile, American Express has been busy quelling discontent among some merchants who are annoyed with the company’s higher payment processing fees.

American Express has also lost cardholders, especially with the advent of no-fee Visa and MasterCards. The number of cardholders fell 2.6% during the first nine months of last year, though American Express said some of that was due to an intentional effort to weed out poor accounts.

Past marketing deals similar to the one Visa reached with Puck have triggered angry reaction from American Express. The company successfully sued Visa over a television commercial featuring the ski resort town of Telluride, Colo., forcing Visa to change the ad. American Express said the commercials falsely implied its card wasn’t accepted anywhere in Telluride.

Thomas O. Ryder, president of American Express’ establishment services division, said the deal between Puck and Visa is “intended to disparage American Express broadly. At most, Visa will make $200,000 from those restaurants. Would you pay $1 million to get $200,000?�