Amex to cut interchange fees to increase acceptance
#16
Original Poster
Join Date: Jun 2016
Location: Prince Edward Island
Programs: Air Canada P25K, Hilton Honors Gold, Marriott Gold, MGM Gold
Posts: 1,582
Who spends $50k per year on groceries? Plus, all the grocery stores around here accept Amex. Most utility companies don't accept credit cards anyway, so there's no difference between Amex and Visa there. In my experience the biggest gap are restaurants. A large percentage of smaller independents restaurants don't accept Amex.
#17
Join Date: Jun 2013
Location: SJC/SFO
Posts: 373
Not 50k on groceries, but 50k on groceries + gas + utilities + restaurants + travel + gifts + clothing... I put everything on a credit card for points (even if it's just a take out coffee). Acceptance varies alot depending on where you live. The biggest grocery store around here doesn't take Amex but many restaurants do.
With travel, hotel and air fare are really the most expensive items, and there again I don't know of any many vendors who accept credit cards but don't accept Amex.
#18
Join Date: Mar 2009
Location: PHX
Programs: HHonors Lifetime Diamond, UA Million Miler Gold, Marriott Platinum
Posts: 1,142
This could be true, but what evidence do you have to support the assertion? I don't mean anecdotes, I mean the type of data that American Express would use to make decisions.
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).
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).
#19
Original Poster
Join Date: Jun 2016
Location: Prince Edward Island
Programs: Air Canada P25K, Hilton Honors Gold, Marriott Gold, MGM Gold
Posts: 1,582
My point is simply that it isn't just big ticket items that matter. Add up all the small purchases over a year and it adds up to a significant sum. We spend more on restaurants than travel.
#20
Join Date: Jun 2013
Location: SJC/SFO
Posts: 373
Right, but you can use Amex at restaurants, just not all of them. So really, Amex is loosing out on only a small percentage of potential revenue. Yet if they lower the interchange fees, they potentially loose a huge amount of revenue.
#21
Join Date: Mar 2009
Location: PHX
Programs: HHonors Lifetime Diamond, UA Million Miler Gold, Marriott Platinum
Posts: 1,142
Out of the items you list, the only item on your list that usually demands high spend is travel. In my personal example, roughly 50% of my yearly spend on credit cards is for travel. And yes, I put everything I possibly can on a credit card, from a $2 coffee to a $15k furniture purchase.
With travel, hotel and air fare are really the most expensive items, and there again I don't know of any many vendors who accept credit cards but don't accept Amex.
With travel, hotel and air fare are really the most expensive items, and there again I don't know of any many vendors who accept credit cards but don't accept Amex.
#22
Original Poster
Join Date: Jun 2016
Location: Prince Edward Island
Programs: Air Canada P25K, Hilton Honors Gold, Marriott Gold, MGM Gold
Posts: 1,582
Unless they attract alot more customers who don't currently have an Amex. I don't know if it will work, but that seems to be the strategy. Amex Canada has a new Cobalt card that is aimed directly at millennials offering lots of bonus points for everyday purchases.
#23
Join Date: Jun 2013
Location: SJC/SFO
Posts: 373
Indeed, they are trading an immediate and noticeable drop in revenue for the potential minor increase in revenue from acquiring new customers. Seems like a really risky strategy.
#24
Join Date: Mar 2009
Location: PHX
Programs: HHonors Lifetime Diamond, UA Million Miler Gold, Marriott Platinum
Posts: 1,142
#25
Join Date: Aug 2012
Location: VPS
Programs: IHG Diamond, Delta PM, Hilton Gold, Accor Gold, Marriott Silver
Posts: 7,268
While that's been the image they've wanted to project, the reality is that the've been courting the middle class with good credit mass market for decades. My schoolteacher parents' first charge or credit card was an American Express green card they got somewhere around 1980 because we were making a family trip to Disneyworld, and they'd done the research on how a charge card made paying travel expenses easy compared to cash/check/traveler's check. (I was too young to hear the details of why they got the Amex instead of a Master Charge card)
#26
Join Date: Jan 2007
Location: NYC/Northern NJ
Programs: 1K - UAL, Platinum DL, Marriott, Hilton, SPG
Posts: 1,815
Good idea but maybe too late.
With the introduction of debit cards for transactions with V/MC logo - everyone basically has V/MC in their wallet and if a merchant claims they would rather not accept Amex - you have an alternative.
Business travel Amex advantage (with its travel agency, accounting reconciliation) has too many competitors with self-serve travel online and cheaper competitors with V/MC.
The Amex advantage has pretty much disappeared over the years for services/concierge with the Internet.
Outside of Pre-Sales concert or shows or special seating at an event (which other financial institution also offeR) - I think the Costco lost was a big deal. After switch over at Costco (gas purchases and store visits) - I basically have zero reason to use Amex over my other V card unless I anticipate dispute of a transaction which Amex is more reliable.
I equate it to a changing landscape in the market place - at one point Blackberry had the best game in town and wasn't prepared for the competitior in iOS or Android plus faster mobile connectivity. BlackBerry could've lowered its fees, license, but hard to reduce profits in anticipation of what is ahead vs. forced to reduce because of reduced profits in the market place.
With the introduction of debit cards for transactions with V/MC logo - everyone basically has V/MC in their wallet and if a merchant claims they would rather not accept Amex - you have an alternative.
Business travel Amex advantage (with its travel agency, accounting reconciliation) has too many competitors with self-serve travel online and cheaper competitors with V/MC.
The Amex advantage has pretty much disappeared over the years for services/concierge with the Internet.
Outside of Pre-Sales concert or shows or special seating at an event (which other financial institution also offeR) - I think the Costco lost was a big deal. After switch over at Costco (gas purchases and store visits) - I basically have zero reason to use Amex over my other V card unless I anticipate dispute of a transaction which Amex is more reliable.
I equate it to a changing landscape in the market place - at one point Blackberry had the best game in town and wasn't prepared for the competitior in iOS or Android plus faster mobile connectivity. BlackBerry could've lowered its fees, license, but hard to reduce profits in anticipation of what is ahead vs. forced to reduce because of reduced profits in the market place.
#27
Out of the items you list, the only item on your list that usually demands high spend is travel. In my personal example, roughly 50% of my yearly spend on credit cards is for travel. And yes, I put everything I possibly can on a credit card, from a $2 coffee to a $15k furniture purchase.
With travel, hotel and air fare are really the most expensive items, and there again I don't know of any many vendors who accept credit cards but don't accept Amex.
With travel, hotel and air fare are really the most expensive items, and there again I don't know of any many vendors who accept credit cards but don't accept Amex.
Someone who lives in an area where things like rent and food are cheap, but other things, like online retail, are fixed in price may feel differently.
#28
Join Date: May 2015
Location: Vancouver
Programs: Aeroplan, Mileage Plus, WestJet Gold, AMEX Plat
Posts: 2,026
Historically those places have had difficulties with merchant acceptance for all cards in general. As I've read on the EMV thread, some places have a large percentage merchants that will only accept V/MC and think it's a "courtesy" to accept any card at all.
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
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
I think the problem with limited AMEX acceptance is corporate accounts. I have been with two employers that have had AMEX corporate programs and at the end of the day they switch to Visa. The reason is when staff travel they want flexibility in picking the restaurant they go to and don't want to deal with the extra paper work of putting expenses on a personal card and then claiming it back. The employee does not want to deal with multiple streams for processing claims.
I run a small business now, have an AMEX Platinum. Still have to have Visa business cards. The guys that sell office furniture don't take AMEX. The printing company does not take AMEX. The independent coffee shop I sometimes like to have meeting at does not take AMEX. The computer hardware and office supply store does not take AMEX. The online portal for renewing the business license does not take AMEX. The lawyers office does not take AMEX. I probably run about 20% of my business changes on AMEX (mostly airlines, hotels, online groceries for the office and some restaurants). For everything else there Visa.
They need to address acceptance at Business to Business retailers and service providers if they want to retain business customers.
#30
Join Date: May 2015
Location: Vancouver
Programs: Aeroplan, Mileage Plus, WestJet Gold, AMEX Plat
Posts: 2,026