Originally Posted by mikesyr18

It's hard to keep track when you're talking to five different people at once.

Reducing your merchant fees for 100% of your current customers [on the merchant side], and then adding a 30% additional acceptance rate in addition to what you have will likely barely have an effect on profits. The net gain probably wouldn't be that much (see below). .

Let's say I made $5,000,000 from my current merchants that make up 65% of the merchant population, while charging on average, a 3% rate.
If I significantly reduce the rate to 2% on average, I'm only making 2/3rds of what I made before if the same amount of spending takes place from the previous year ($3,300,000).
If I add additional 30% of the merchant population into the equation, and say, get $5,500,000.00 in revenue after the fact, I haven't gained that much money.

Chase isn't "revamping" their offerings. They're coming out with new products that either do or don't compete with AMEX. For example, the CSR "competes" with the Platinum, but it was introduced as a new product. AMEX on the other hand, had to go back and edit the current benefits and rewards structure just to keep up... If AMEX didn't feel threatened, they would have left the Platinum alone. The article states that AMEX's executives fear the additional competition will burn them, but with the way I interpreted the article (and their statement), the executives were feeling the heat before the CSR was even introduced by way of other product offerings (like the Citi Prestige, Merrill Lynch's Octave, etc.).

And of course I don't make sense to you... You have no grasp of how the free market works. AMEX is only reducing merchant fees because competition is forcing them to. or if they don't reduce them, they think they won't be able to compete anymore (apparently). Without competition, card interchange fees would go up in the U.S, not down.