American Express Membership Rewards - Merchants who add on % for using AMEX !!!

I am tired of being told by merchants that if I use my AMEX card they have to add on 3% or more on my bill to cover the cost that AMEX charges them.

I was used to it in China and Hong Kong but in the last two months I have had my bill jacked up in the United Kingdom and Canada as well. This has got to stop.

What is the policy regarding this by American Express? Has anybody just flatout refused to pay and walk out as I have done in Hong Kong recently.

It seems to me like that some merchants would rather look at their inventory on his/her shelf than see it walk out the door as an AMEX sale.

What gives?

[This message has been edited by davistev (edited 08-13-2001).]

Merchants are prohibited from doing this in the U.S. by American Express. I am unsure of the Amex rules in AsiaPac region. I would turn them into Amex and see what happens.


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Hilton Diamond-VIP

The agreements merchants sign with the credit card companies (AmEx, MasterCard, Visa, etc) prohibit them from adding a fee for their use, as well as prohibiting them from setting a minumum $ amount for usage. We all know that many do this, however. Remember that the merchant loses 2% to 5% of the sale for the fees they are charged (AmEx charges the most). I don't think there is anything wrong if the merchant offers a discount if you pay with cash.

Since MORE vendors are accepting AmEx, I am assuming that they have lowered their commission. Yet, many vendors don't seem to know what changes occured.

Does anyone know what the current commission % is?

Commissions can vary significantly based on volume and average ticket size. Typically, the discount for Amex can range from 2.5-5%. Compare this to MC/Visa for which the average retail establishment probably is not paying more than a 2.25% discount. Additionally, I think Amex makes special, lower discount deals for 'name' establishments. I often wonder discount Disney is charged (I 'hear' that the discount rate for MC/Visa at WDW used to be ~.5%)


[This message has been edited by BillMorrow (edited 08-13-2001).]

Most Merchants objected to the 5% commission and based their refusal on that. but now with the wide acceptance, it must be closer to Visa's charge!

Frankly, I was very surprised at how wide the acceptance has been the past year. Enough, that I got $25,000.00 charged in less then 10 months. I believe that AmEx has beat out Diner's for acceptance.

I'm tired of merchants complaining about the credit card fees. If they don't want to pay the fee, they shouldn't accept credit cards. Instead, they choose to sign an agreement with the credit card issuers and then supress cardholders from paying with anything but cash?

Accepting credit cards is a cost of doing business. Build it into your finances, or get someone who knows what they're doing to do it for you. But don't come complaining to me, I'm a customer, with money. I'm not the complaints department.

I recently switched to a new policy of not patronizing establishments that don't accept my preferred credit card. And, for places that do, if they try to disuade me from using a credit card, I walk away from the purchase. There are plenty of other merchants who will gladly accept my money.

d

Assuming you can trust the bank / charge company not to stiff the merchant, I figure the surcharge merchants must pay offsets the risk associated with lots of all-cash transactions.
If I was an 18yr working the night shift at a gas station, for example, I'd MUCH prefer the transactions I need to deal with to be credit card charges. No chance of me messing up the change (boss happy about that), plus MUCH less risk of being held up ("Give me all your charge receipts for the night - I think not!").

Jeff

Doppy (and others of this thread),

Are you not aware of the hypocracy between the US Federal Government, IRS, and Visa&M/C, which work together to allow taxpayers to make their payment by Visa and M/C (don't think AMEX was part of this program) BUT charge a convenience fee of 3% ? For 2% I would take the hit and do it, but 3% is over the line for "affordable" ff miles.

Yes, the IRS's approved authority(s) to accept tax payments for US taxpayers openly and with the full approval of the US govt AND the major credit card companies, charge this exact type of surcharge, and label it a "convenience fee".

Good luck "changing the system" when such an open, visible, and high-level surcharge takes place in the credit card world...literally gives every merchant essentially carte blanche (pardon the pun) to add the same surcharge...whether labeled with politically correct names such as a "convenience fee", "cash discount", etc.

Exxon did this for years (added 3% for use of credit card), and if I spent a few minutes, could probably find other example of major corporate policies.

FWIW

Agree 100% with DOPPY. Either the merchant accepts a card or doesn't - the client who wants to use his/her card should NEVER hear about the % charged, etc etc (unless he/she asks, of course) - it doesn't really matter to me as a client because I just assume that the merchant has already figured out the costs of accepting the card and built them into his price structure.

As DOPPY said so well:

Accepting credit cards is a cost of doing business. Build it into your finances, or get someone who knows what they're doing to do it for you. But don't come complaining to me, I'm a customer, with money. I'm not the complaints department.

And my biggest personal pet peeve in this department:

The Amex logo is displayed all over the storefront, the cash register, etc. I pull out my AMEX card to pay for my purchase and the salesperson gives a disapproving look and asks if I have "anything else" to pay with .... arghhhh!

Of course I have other things to pay with: Visa, MC, cash, my blood, my firstborn child ... but I WANT to pay with the darn AMEX card, or else I wouldn't have whipped it out in the first place ("oops! What's that silly AMEX card doing in my hand again? I really meant to pay cash. Very sorry").

Can you tell this is a sensitive subject with me? http://www.flyertalk.com/forum/smile.gif

I add that in France, VISA and MC have no "affinity" cards with airlines for racking up miles with purchases. The closest thing I can get is Amex's Membership "Rewards" which is a 10 francs for 1 point deal.

[This message has been edited by blairvanhorn (edited 08-13-2001).]

When we had a small business the fees for taking Amex would have cost us around 2% or so. It was around 1.5% for Visa/MC.

It isn't really that simple .. the fee structure for a service provider is like choosing a bank account, there are monthly account fees, and per transaction fees and discount rates, etc. The fee structure depends on your credit rating, the type of business you are in, if you take mail order or phone order because they have higher chargeback rates. It's also a slightly higher fee if the merchant can't swipe your card and has to enter the numbers manually.

-David

I am and have been a retail merchant for over 15 years.

This is a simple topic. You want business, you accept the customer's method-of-payment. As a customer, if they do not want to accept your method-of-payment, go somewhere else.

And for those who say it is not so simple, (convenience, etc......), buy from the merchant that day, then research for another merchant for the next time.

ILUVCITIBANK -

The government charging the convienience fee is different than a merchant doing so. The IRS charges people takes based on the federal tax code. It has no authority to change how much taxpayers owe, so it can't build the credit card transaction fees into the general tax structure. It would take Congressional approval to do so. Instead, congress has decided not to build this into the price of goods and to make the taxpayer foot the bill for his or her individual credit card usage.

Merchants, on the other hand, know who's buying what, what their margins are, how much the credit card transaction fee is, and how many customers want to use their credit cards. They also have the ability to change prices on goods and services to compensate for this.

There are a lot of low margin businesses out there that seem to be making a profit, even though they accept a lot of credit cards. Look at grocery stores. They typically operate on a 3% margin, and get tons of credit cards a day. But then we have people who sell luxury goods, like exotic cars, who complain that the credit card fee would make their sales unprofitable? Last time I checked in the businesses textbooks, luxury goods are supposed to have high margins. If you're not making a high margin, I think the credit card fee is the least of your problems.

Bottom line - merchants should either accept or not. I said it before - don't put signs up and then try to make me feel bad for using my credit card. Who is the customer?

d

I too agree with Doppy. I am a small business merchant. Not only do I find AMEX to be the card of choice of most of my clients, they charge a reasonable commission (I think 2.8%). I see immediate results. There are no bad debts from uncollectible receivables or bad checks, the sales are deposited directly to my designated bank account within 2 business days, but most importantly, there is the value-added aspect of them supplying me with the tools necessary to increase my business (such as co-op advertising, mailing labels by zip codes, and the list goes on and on). At my shop AMEX is the preferred method of payment.

Yeahhh, landmikel!

That's the spirit. Is your business a retail one that we might visit if we come to Atlanta?

I phoned American Express Canada about this issue. The Canadian stance is that merchants are required by their agreement to accept AMEX if offered with no charges to be added on top. I reported the individual store who charged me 3% commission on top of my purchase price (the merchant even itemized it on the bill) to AMEX Canada. Their next step is to contact the merchant and give a warning. If it is ongoing, they will pull the AMEX sticker of the window and close their account. As for my UK and other transactions, AMEX Canada has no authority to enforce the "Agreement" outside of Canada. They did however provide me with the AMEX UK phone number so that I may enquire further.

I should point out that no refund of surcharge was offered by AMEX Canada. It gets down to a matter of where your card was issued. Essentially, this means that once outside of the country of card issuance you have little recourse.

Dave

Doppy posted:..."The government charging the convienience fee is different than a merchant doing so."

Doppy, I believe you are using a legalistic red-herring argument to explain away the gov't-supported, gov't approved, gov't mandated "convenience fee" for charging tax payers to use a Visa or M/C. I see the CONCEPT and THEORY no different whatsoever.

It's a fee based on credit card usage - period. Supposedly "against the rules"...but for the government, "we'll overlook it" says AMEX, Visa, and M/C. Technically, I don't think AMEX is part of this program but could be wrong.

IMHO, if you want to berate the small businessman, or many times large business (I clearly recall Exxon charing two separate prices for years on end at the gaspump)...for adding a surcharge (technically, AMEX and Visa AND M/C already allow a merchant to offer a "cash discount" - which is code for charging the surcharge when a credit card is presented - go read up on the subject before you dig yourself deeper)...then I should expect you to be consistent if nothing else and complain about the IRS doing it (actually a contracted 3rd party payment processing company to be technical). Your argument is baseless otherwise to me and many of my friends/fellow merchants who begrudgingly accept the AMEX card for high-price, low-margin product we all sell. And before you throw out that canned response "so why do you accept it to begin with" comment...you should know on any given day, I could care less if AMEX cancels my merchant account to begin with in which case I would stick with the more affordable and small business centric V, M/C, and DIscover programs exclusively. I think AMEX knows precisely the vulnerability of their position vis a vis charging 1%-3% MORE OFF THE TOP versus V, M/C, and Discover, and I can almost say with certainty, though its opinion and intuition only, that you can report whomever you wish to report...and AMEX will do nothing about it. A paper tiger of a policy if ever there was one.

Ever wondered why almost any major car dealer in the US displays V, M/C, AMEX and Discover prominently...but will deny you flatly if you attempt to pay for a car with a credit card ? Yes, you can pay for your parts in the parts dept, or for that oikl change, but not for the high-value, low-margin vehicle itself. Do you honestly think AMEX hasn't weighed over and over the trade-off between the complainers/consumers, versus the income brought in by at least those auto dealers' parts and service AMEX sales ? AMEX knows, as does V, M/C, and Discover, exactly what's going on. Complain all you want - I won't *buy in* until I see you complain at the highest levels to the IRS. I was dumbfounded 2 (or was it 3) yrs ago when I first learned I could potentially pay my annual income taxes by credit card...that would have been massive miles over the past few years for my affinity program...but then learned I would have to eat a 3% convenience fee. I made a few calls and got exactly nowhere with my arguments (not unlike yours). Talk about the immovable object.

So - humbly request you try to explain how it is the gov't is allowed, in your eyes, to charge me (and you) a convenience fee, yet it irritates you so greatly when a merchant does. Not speaking of the legalistic argument of the IRS not being allowed my code to accept less than amount due, but on a higher level, the fairness and altruism of them being allowed to charge me when I likewise can't charge a surcharge (er, excuse me - offer a cash discount for non-credit card payments). I'm still lost in the logic somewhere.

My point is that the IRS can't build the cost of doing business (i.e. accepting credit cards) into the tax law. It is required by Congress to accept what is due, hence the convenience fee. I think it would make sense to build this in, and thus do away with the convenience fee. But, to do so would require approval by Congress, and presumably the President's signature. Regardless, it think it should be done.

Businesspeople do have the flexibility to change their prices according to their costs of doing business. Like the government, this should be factored into the price, and so a B-S snooty attitude should not come through to the customer who wants to buy a product or service, from someone offering goods for sale.

If you are offering goods and services for sale at a price that does not yield a profit for you, then who is the problem? The customer, AmEx, Visa, MC, or you, for not properly pricing your goods and services? You may blame whomever you wish, so long as it isn't the customer. The customer just wants to buy your wares, not hear a sob story about how you can't manage your finances.

I have quite a lot of experience on the management of businesses which accept credit cards as forms of payment, so I'm not completely in the dark.

Meanwhile, I will continue to use my credit card wherever it is accepted. I'm not going to carry around thousands of dollars on me at all times, just to satisfy business owners. If I get an attitude or an unexpected fee (i.e. a fee that is not mentioned to me well before I begin the buying process) then I will take my business elsewhere. It's that simple.

ILUVCITIBANK -
Why do you berate the government for charging a convenience fee, and make phone calls trying to get around it, but then play a violin for merchants who don't want to pony up the extra 1-3% AmEx fee? You think it is OK for merchants to accept the card sometimes, but not others, as well as add fees (by way of on-the-top or cash discount), but not for the government to? I think that's a little bit hypocritical.

Again, for the record, I think everyone, business and government alike, should be building credit card costs into their businesses. If it doesn't make sense to accept them, then don't.

d

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Doppy:
I'm tired of merchants complaining about the credit card fees. If they don't want to pay the fee, they shouldn't accept credit cards. </font>

Well, the sensible thing would be just not to accept the one that gouges them the most, Amex.

To Blairvanhorn-

You mentioned the lack of VISA or MC in France with mileage affinty.

We have USA based MC and VISA with mileage links and they work fine in France. They're "cartes etrangers" and the merchant has to use a different machine to process them, not the one with a code that is used to process France-issued cards. However, we've never been turned down, even in small towns.

Also, FirstUsa with UA affinity charges only the 1% Visa or MC conversion fee-no add-ons.

[This message has been edited by Mountain Trader (edited 08-28-2001).]

Hi, Mountain Trader.

My situation is that I am resident in France, my bank is here, my paychecks are here, etc. French banks don't issue VISA/MC with airline mileage affinity programs. I believe the U.K. is the only "European" country that has launched these type of affinity cards - maybe with the single Euro currency in 2002 this might change.

Anyhow, I have thought about opening a bank acct in the U.S. just to get a United Airlines Visa card - but with all the hassles and costs of transfering funds back and forth, I'm just waiting (and earning "rewards" with my AMEX card).

Thanks for your post.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Mountain Trader:
We have USA based MC and VISA with mileage links and they work fine in France. They're "cartes etrangers" and the merchant has to use a different machine to process them, not the one with a code that is used to process France-issued cards. However, we've never been turned down, even in small towns.

Also, FirstUsa with UA affinity charges only the 1% Visa or MC conversion fee-no add-ons.</font>

You can't have a US credit card if you don't have a US address. Unless you've got a strong connection to the States, it would be way too much effort.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Well, the sensible thing would be just not to accept the one that gouges them the most, Amex.</font>

That's certainly an option for the merchant. But this points exactly to the issue with the problematic merchants. If the ones that complain about the higher discount rate that Amex charges are so concerned about it, why do they accept Amex at all? They could easily do just what you say above, and not accept it. The reason that they don't is they know they would lose business. There are many people that travel on business where the only (easy) way they can pay for things on the company's tab is to use the corporate Amex card. Plus, even for individuals, an Amex cardholder tends to have a much larger average sale than a Visa/MC cardholder. Certainly, businesses want to bring in the high-ticket customer. But, they seem to want to have their cake and eat it too. They want to be able to hang out the Amex shingle to attract customers, but then hassle them when they actually try to use the card. They should choose one way or the other, and stick to it.

davistev I had similar problem in Thailand last year. I reluctantly paid the surcharges each time and when I returned home I complained to AMEX and had all the surcharges refunded. Annoying, but it worked out in the end.

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<font face="Verdana, Arial, Helvetica, sans-serif" size="2"> You can't have a US credit card if you don't have a US address.</font>

Oh yes you can!

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Craig

When I've presented my AMX I've had merchants ask if I have a Visa or MC, even though they display the AMX sticker in the window to lure me inside. I have walked away from a sale and told them why. If enough of us do it maybe it will make a difference.

"I add that in France, VISA and MC have no "affinity" cards with airlines for racking up miles with purchases"

LH offers an affinity card in Germany, Austria, and some third European/GB country. One must go to the LH site of that country, but one must have an electronic debting bank acct in the issuing country.

Yes Strolly, my thoughts exactly. I now phone the merchant and ask if they accept amex. If not, oh well - no sale! My AMEX card is a corporate linked card that keeps track of expenses and divides it in categories on my yearly audit. It is a wonderful way to summarise my spending.


Dave - London, UK

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by mch710:
You can't have a US credit card if you don't have a US address. Unless you've got a strong connection to the States, it would be way too much effort.</font>

Its easy to set up a virtual US "presence". http://www.usabox.com/ provides a virtual us address and "mailboxes etc" like service. I've used them for over two years without a problem.

Most major card issuers now have electronic statements and online transaction viewing, so it is very easy.

Now getting a card issuer to issue a card with employment outside of the US is a little harder, but not impossible.

Worst comes to worse, set up an account with a internet bank and use their debit card. Prepaid cards like http://www.cobaltcard.com or http://www.visabuxx.com are another options.

Sean




[This message has been edited by skofarrell (edited 09-05-2001).]

They are probably after a US address and a US Social Security number so that they can pull your credit report from one of the 3 agencies....

After that, it depends on the issuer as to whether they will mail internationally.

I accept AMEX at my place of business as well as MC/VISA. the notion that there is a vast diffence between the fees that the merchant is charged by them, vs those charged by AMEX is negligible. While it is true the fee for AMEX is higher it is only slightly higher in most cases..at least it is at my busines. How much perhaps the differnce of 1/2 %. Big deal.
Not only is AMEX the only card I use, it is the only card I have ever had. Recently, I was in a local sporting goods / outdoor recreation store in SLC ..took about $1100.00 worth of mechandise to the check out counter and laid my AMEX down. Was told very indignently by the clerk " well, we do not even honor AMEX..you will need to pay with MC/VISA or cash." By this time I was getting a bit ticked off so I retorted ...as I was putting my AMEX back ." Really, is that so ! I quess you will need to call the stock room and have them restock these items back on the racks as I do not want them now "..and walked out the door. All this for a lousy 1/2 point in fees. I quess this was a case that the merchant may have outsmarted himself. I have not been back..and will never go back to this store. And will gladly continue to patronize AMEX merchants.