Amex to cut interchange fees to increase acceptance
#1
Original Poster
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Amex to cut interchange fees to increase acceptance
I saw this article when I logged onto FT this morning and was surprised that there was no discussion thread started (unless I missed it):
https://www.flyertalk.com/articles/a...ance-rate.html
I'd love to see Amex get wider acceptance so that I don't have to carry a Visa card as a backup. Hopefully, this new approach will work.
I'd love to see Amex get wider acceptance so that I don't have to carry a Visa card as a backup. Hopefully, this new approach will work.
#2
Join Date: Mar 2017
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I saw this article when I logged onto FT this morning and was surprised that there was no discussion thread started (unless I missed it):
https://www.flyertalk.com/articles/a...ance-rate.html
I'd love to see Amex get wider acceptance so that I don't have to carry a Visa card as a backup. Hopefully, this new approach will work.
I'd love to see Amex get wider acceptance so that I don't have to carry a Visa card as a backup. Hopefully, this new approach will work.
At the top, they're almost as bad as Citi in the management department. AMEX should not care about acceptance, but should base their business model off of higher interchange fees, promoting the use of higher spenders who have their cards, while providing exceptional benefits other card networks/issuers can't match.
You must not know much about the history of AMEX or what this means for them. Because of AMEX's flop, cardholders no longer can look at them as cards that give "the customer the power," rather than the merchant. Visa and MC have always been more of a customer for the merchant rather than the cardholder, AMEX was the opposite, but not anymore apparently. Lower interchange fees will mean less revenue, despite what AMEX thinks will happen if more merchants start accepting them. What happens when your revenue goes down? You have to cut from somewhere, whether it's customer service, perks, or rewards, or whatever. So instead of coming out with an innovative card system, they'll just stoop down to the V/MC business model instead. AMEX will not be able to compete with V/MC based on card popularity, bank choices, and now what will be the lack of interest for most of their cards from the consumer.
Why would I go out of my way to use an AMEX anymore? The decreased interchange fees will mean they side with the merchant first, cut purchase purchase protections, etc. I'll just dump AMEX and use my Visas and MasterCards.
#3
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With this article, I must say there's simply no reason to carry an AMEX anymore unless you're very loyal to Hilton, Delta, or some of their transfer partners.
At the top, they're almost as bad as Citi in the management department. AMEX should not care about acceptance, but should base their business model off of higher interchange fees, promoting the use of higher spenders who have their cards, while providing exceptional benefits other card networks/issuers can't match.
You must not know much about the history of AMEX or what this means for them. Because of AMEX's flop, cardholders no longer can look at them as cards that give "the customer the power," rather than the merchant. Visa and MC have always been more of a customer for the merchant rather than the cardholder, AMEX was the opposite, but not anymore apparently. Lower interchange fees will mean less revenue, despite what AMEX thinks will happen if more merchants start accepting them. What happens when your revenue goes down? You have to cut from somewhere, whether it's customer service, perks, or rewards, or whatever. So instead of coming out with an innovative card system, they'll just stoop down to the V/MC business model instead. AMEX will not be able to compete with V/MC based on card popularity, bank choices, and now what will be the lack of interest for most of their cards from the consumer.
Why would I go out of my way to use an AMEX anymore? The decreased interchange fees will mean they side with the merchant first, cut purchase purchase protections, etc. I'll just dump AMEX and use my Visas and MasterCards.
At the top, they're almost as bad as Citi in the management department. AMEX should not care about acceptance, but should base their business model off of higher interchange fees, promoting the use of higher spenders who have their cards, while providing exceptional benefits other card networks/issuers can't match.
You must not know much about the history of AMEX or what this means for them. Because of AMEX's flop, cardholders no longer can look at them as cards that give "the customer the power," rather than the merchant. Visa and MC have always been more of a customer for the merchant rather than the cardholder, AMEX was the opposite, but not anymore apparently. Lower interchange fees will mean less revenue, despite what AMEX thinks will happen if more merchants start accepting them. What happens when your revenue goes down? You have to cut from somewhere, whether it's customer service, perks, or rewards, or whatever. So instead of coming out with an innovative card system, they'll just stoop down to the V/MC business model instead. AMEX will not be able to compete with V/MC based on card popularity, bank choices, and now what will be the lack of interest for most of their cards from the consumer.
Why would I go out of my way to use an AMEX anymore? The decreased interchange fees will mean they side with the merchant first, cut purchase purchase protections, etc. I'll just dump AMEX and use my Visas and MasterCards.
Amex can tout its appeal to higher spenders all day long and it won't make a shred of difference if a high roller wants to buy something from a merchant that doesn't accept Amex.
#4
Join Date: Mar 2017
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Must be nice to have access to all the same data, research, and analysis that Amex has internally. I somehow doubt that Amex came to this decision lightly...
Amex can tout its appeal to higher spenders all day long and it won't make a shred of difference if a high roller wants to buy something from a merchant that doesn't accept Amex.
Amex can tout its appeal to higher spenders all day long and it won't make a shred of difference if a high roller wants to buy something from a merchant that doesn't accept Amex.
#5
Join Date: Jul 2016
Posts: 56
I don't think this is the case anymore. I regularly go to a small store that only takes Visa and MC because I like them. I wish they took Amex but the benefits of their services outweigh using whatever Amex card I'm wanting to use. Amex diluted their brand with the Costco card and have been walking down this path for a while now. You could call the introduction of Blue as the initial watering down. Now they're just another card issuer but one that doesn't get accepted everywhere like Discover. Their historical prestige is carrying them at this point but they can't rely on that for long.
#6
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In 2017 Costco stopped accepting American Express. Did they lose members? No, increased from 47.6 to 49.4 million. Did they lose sales? No, increased from $159 to $163 million per warehouse. If there is an American Express loyalty effect, it seems to be pretty weak. (Costco Annual Report, 2017).
#7
Join Date: Mar 2017
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In 2017 Costco stopped accepting American Express. Did they lose members? No, increased from 47.6 to 49.4 million. Did they lose sales? No, increased from $159 to $163 million per warehouse. If there is an American Express loyalty effect, it seems to be pretty weak. (Costco Annual Report, 2017).
I still think those people who are loyal to the programs AMEX offers (SPG/Marriott, Delta, Hilton, etc.) may look for a competitor that accepts AMEX because they want to use their specific card to gain points through their loyalty program.
Last edited by mikesyr18; Mar 17, 2018 at 12:00 pm
#8
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I think that's the point bradpetrik was trying to make. That Discover is a useless card because it isn't accepted everywhere and Amex is similar.
#9
Join Date: Jun 2013
Location: SJC/SFO
Posts: 373
In 2017 Costco stopped accepting American Express. Did they lose members? No, increased from 47.6 to 49.4 million. Did they lose sales? No, increased from $159 to $163 million per warehouse. If there is an American Express loyalty effect, it seems to be pretty weak. (Costco Annual Report, 2017).
Just look at the Platinum card: it is a charge card and you are supposed to pay off the balance every month. Yet now they're introducing various ways to carry a balance. For the past 6 months they have been pestering me with ads and mailers, offering me 6 months of 0% if I carried a balance on the Platinum. Basically they're trying to convince people who can't afford it to spend on expensive travel and luxury items with their Platinum. The reason? Their traditional revenue (interchange fees, advertising) is drying up.
#10
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AMEX on the other hand is closer to 65% (maybe) but I accept that fact, especially if they were giving me more power than the merchant would have to contest purchase and all that.
#11
Join Date: Jun 2013
Location: SJC/SFO
Posts: 373
Not in my experience. During the last resturant quarter I tried to use Discover for all my dining. This was in New York City and San Francisco. My success rate was less than 50%.
#12
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Join Date: Jun 2013
Posts: 17,410
I carry a BarclayCard Arrival Plus for when Amex doesn't work.
And I have my choice of West Coast-based carrier-branded Visas for Costco.
I'm simply using these cards to suit my needs. I am not trying to maximize awards and such. So I can understand how the knock on effects of this reduction might concern those that do.
#13
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There is a middle ground. There are lots of middle class professionals who aren't spending hundreds of thousands on luxury items, but still put $50-$100k on credit cards every year. However, much of that spend is on everyday things like utility bills and groceries. If those places don't take Amex, they lose that business to Visa. That's the situation I'm in. I'd love to put all my spend on Amex because I like the points and benefits, but it just isn't possible.
#14
Join Date: Jun 2013
Location: SJC/SFO
Posts: 373
There is a middle ground. There are lots of middle class professionals who aren't spending hundreds of thousands on luxury items, but are still put $50-$100k on credit cards every year. However, much of that spend is on everyday things like utility bills and groceries. If those places don't take Amex, they lose that business to Visa. That's the situation I'm in. I'd love to put all my spend on Amex because I like the points and benefits, but it just isn't possible.
#15
Join Date: Mar 2017
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For everywhere else, Discover acceptance is over 90%. You also have to figure in the Diner's Club acceptance that pairs with Discover's own acceptance, and then there's some merchants out there, including small businesses who took Discover when I gave them the card, but only display the V/MC symbols on their window.
https://www.valuepenguin.com/where-v...cover-accepted