Originally Posted by ILUVCITIBANK

LittleFlyer, with all due respect, and not casting doubt on your reporting what you heard...does anyone in the room feel AMEX's true cost is $2500/yr per cardholder...ie they are *breaking even* or even losing money, on CENTURION ?

Please. I can't imagine in my mind's eye that AMEX would intentionally offer a program which operated on a hard financial loss basis. If so, I have even less respect for them than I did.

As a merchant myself who accepts all four major ccards in the US (AMEX, V, MC, and DIS), trust me - AMEX charges the highest discount of all card issuers (as much as 2.5 to 4.5% depending on the business profile, when V charges 2% or less; thus AMEX's 3.5% (lets use the median discount in this hypothetical case) is a whopping 57% (2/3.5) more than their competitors' product). Thus, AMEX has a MUCH HIGHER profit margin to support their affinity program(s), whether CENT or PLAT or MR. This is partly ameliorated by the fact that AMEX's CHARGE products do not typically allow for balance carry-over which would generate INTEREST REVENUE, while V/MC/DIS by definition make INTEREST REVENUE (not consider AMEX's OPTIMA products; only their charge products).

Knowing this then, when they induce their highest-charging class (by definition $250K spend annual threshold = their highest-charging class) of ccardholders to upgrade to the CENT program, this same class MUST proportionately also generate the most revenue PER CAPITA of any of their card-holding classes. Thus, if they claim they are losing money on the CENT program then, IMO, its only because they play shell games with SGA, overhead and internal costs and dump them into the CENT program.

Since they have hemorrhaged affinity partners practically since the CENT perk package was released, I can't think they have increased their maintenance costs of the CENT program, per se...AMEX has only reduced, diminished, and degraded the CENT perk package since inception (or allowed it to happen - same difference to me).