Credit Cards Center Credit cards from our partners
Reply
Blogger
Posts: 3,367
Registered: ‎10-19-2012
0

Why do Amex-processed, non Amex-issued cards exist?

As far as I know, Amex cards are less accepted than Visa and Mastercard cards just about everywhere in the world. So why do creditors ever choose Amex for payment processing network? Is there any benefit to having a card processed through American Express, from both the bank's and the consumers' points of view?

Established Contributor
Posts: 560
Registered: ‎10-22-2012
0

Re: Why do Amex-processed, non Amex-issued cards exist?


HiLine wrote:

As far as I know, Amex cards are less accepted than Visa and Mastercard cards just about everywhere in the world. So why do creditors ever choose Amex for payment processing network? Is there any benefit to having a card processed through American Express, from both the bank's and the consumers' points of view?


I believe that it would have a higher swipe fee.  I could very well be wrong though.  That is my assuption though.

Capital One Quicksilver- $5,000 (Thanks Cap1 Executive Office <3) | Chase Freedom - $7,100 | Chase Amazon -$1,000 | Priceline Visa -$10,000 | US Bank Cash+ - $18,200 | Fidelity Amex -$10,000 | Sallie Mae- $10,000 | Walmart $15,000 | DCU Platinum $12,000 | Discover IT - $9,000 | Amex EveryDay - $25,000  | Amex BlueCash Everyday- $9,800 | Citi DoubleCash - $15,000 | Sapphire Preferred- $13,000 Freedom Unlimited$7,000 Blispay$12,000

Super Contributor
Posts: 7,132
Registered: ‎02-27-2013
0

Re: Why do Amex-processed, non Amex-issued cards exist?

From my understanding cards using American Express and discover payment networks have higher swipe fees
JPMorgan Palladium (100k), AmEx Platinum (NPSL), AmEx SPG (46k), AmEx BCP (42k), Chase Sapphire Preferred (47k), Citi Prestige (31k), Citi Thank You Preferred (27k), Citi Executive AAdvantage (25k), JPMorgan Ritz-Carlton (21k), Merrill+ (15k), US Bank Cash+ (22.5k), Wells Fargo (12k), Bloomingdale’s (12.4k), Chase Freedom (5k), Discover IT (5k).
Blogger
Posts: 3,367
Registered: ‎10-19-2012
0

Re: Why do Amex-processed, non Amex-issued cards exist?

Do those swipe fees go back to Amex/Discover or to issuing banks? 

Moderator Emeritus
Posts: 14,868
Registered: ‎12-30-2011
0

Re: Why do Amex-processed, non Amex-issued cards exist?


enharu wrote:
From my understanding cards using American Express and discover payment networks have higher swipe fees

This, the swipe fee is shared between lender and transactional network, and for all we know the split could be identical or even better in Amex's case for the institution.

 

Also, like it or not, Amex does have it's fungable prestiege, and even on this forum recently we have several members who in general are in the top 5% of the credit-knowledgeable folk in the consumer space, and they were getting the cards from various other institutions that authorize on the Amex transactional network, mixed up with the Amex co-brands.

 

It seems silly to some of us, but the little logo on the corner of the restaurant bill fold plays just as well with any Amex transactional card instead of just the mainline Amex charge or revolvers.  I'm fairly confident Amex's markleting has slipped in here as well, and if you can keep customers Amex would like to have in house in your lending institution, that's a small price to pay for even a possibly slighly decreased cut of swipe fee even... something of something being better than nothing of nothing.

 

 

 

Starting Score: EQ 04 561, TU 98 567, EX 98 599 (12/30/11)
Current Score: EQ 04 693, EQ 8 716, TU 8 713, EX 8 740 (09/06/16)
Goal Score: 700 on EQ 04 (01/01/17)


Take the myFICO Fitness Challenge
Blogger
Posts: 3,367
Registered: ‎10-19-2012
0

Re: Why do Amex-processed, non Amex-issued cards exist?


Revelate wrote:

enharu wrote:
From my understanding cards using American Express and discover payment networks have higher swipe fees

This, the swipe fee is shared between lender and transactional network, and for all we know the split could be identical or even better in Amex's case for the institution.

 


 

Interesting point. Do you have any documents on this by chance? I've been under the impression that the higher swipe fee is completely due to Amex's charge on the issuing bank, i.e., the bank doesn't have anything to gain from a higher swipe fee.


Revelate wrote:

 

Also, like it or not, Amex does have it's fungable prestiege, and even on this forum recently we have several members who in general are in the top 5% of the credit-knowledgeable folk in the consumer space, and they were getting the cards from various other institutions that authorize on the Amex transactional network, mixed up with the Amex co-brands.

 

It seems silly to some of us, but the little logo on the corner of the restaurant bill fold plays just as well with any Amex transactional card instead of just the mainline Amex charge or revolvers.  I'm fairly confident Amex's markleting has slipped in here as well, and if you can keep customers Amex would like to have in house in your lending institution, that's a small price to pay for even a possibly slighly decreased cut of swipe fee even... something of something being better than nothing of nothing.

 


 

I completely agree with you. As we've discussed in another thread, the fact that every single Amex-processed card in the market contains "American Express" in the name doesn't help alleviate the confusion.

Super Contributor
Posts: 7,132
Registered: ‎02-27-2013
0

Re: Why do Amex-processed, non Amex-issued cards exist?

Well to those companies utilizing Amex networks, they are doing so most probably with the intention of riding on Amex's reputation, and also possibly for the higher swipe fees, though it comes at the cost of lower acceptance at places in general.

As for Amex, its a good risk free stream of income, since they are doing what visa and MasterCard are doing pretty much, not having to take up any additional debt during the process. It's not exactly harming Amex's reputation technically, since its not like those companies are going around committing fraud and what not under Amex's name. People just regard those cards as basic tiers and all Amex has to do is to solidify the reputation of their higher tier cards to show the distinction.
JPMorgan Palladium (100k), AmEx Platinum (NPSL), AmEx SPG (46k), AmEx BCP (42k), Chase Sapphire Preferred (47k), Citi Prestige (31k), Citi Thank You Preferred (27k), Citi Executive AAdvantage (25k), JPMorgan Ritz-Carlton (21k), Merrill+ (15k), US Bank Cash+ (22.5k), Wells Fargo (12k), Bloomingdale’s (12.4k), Chase Freedom (5k), Discover IT (5k).
Senior Contributor
Posts: 3,528
Registered: ‎01-19-2009
0

Re: Why do Amex-processed, non Amex-issued cards exist?

I am pretty sure that American Express has done studies where they tell merchants people who use there cards will spend more than a Visa or MC holder, not sure that is the case but American Express uses that to get merchants to accept there cards.....

Super Contributor
Posts: 6,224
Registered: ‎02-23-2011
0

Re: Why do Amex-processed, non Amex-issued cards exist?


HiLine wrote:

As far as I know, Amex cards are less accepted than Visa and Mastercard cards just about everywhere in the world. So why do creditors ever choose Amex for payment processing network? 


For issuers, the main reason would be for vendor diversification.  

 

I recall in the 80s and 90s, VISA had so much market share, they were becoming increasingly arrogant with their pricing and handling of their clients.  At one point, Citi's relationship with Visa had soured to the point where they refused to offer cards using the Visa network.  For a long time, Citibank debits and credit cards were MC only.

 

Senior Contributor
Posts: 8,517
Registered: ‎06-05-2013
0

Re: Why do Amex-processed, non Amex-issued cards exist?

[ Edited ]

HiLine wrote:

As far as I know, Amex cards are less accepted than Visa and Mastercard cards just about everywhere in the world. So why do creditors ever choose Amex for payment processing network?


By that reasoning Discover processed cards shouldn't exist either.  More choices means more options and more money making opportunties.

 


HiLine wrote:

Is there any benefit to having a card processed through American Express, from both the bank's and the consumers' points of view?


Again, more options from both perspectives.  If USAA didn't offer their American Express card I'd have one less card.  It's mostly a sock drawer card at this point but when I signed up it offered me a decent credit line and decent benefits with no AF for my credit (which was not great back then) in addition to my other USAA cards.

 

 

Why do you seem to think that less options benefits anyone?  Speaking very generically, even if you don't get an option (no matter what the topic) that doesn't mean that no one does and that no one could possibly benefit from the option.  One size never fits all.

 


HiLine wrote:

I completely agree with you. As we've discussed in another thread, the fact that every single Amex-processed card in the market contains "American Express" in the name doesn't help alleviate the confusion.


Any confusion is the fault of the confused.  It takes very little effort to clarify.  I was never under the impression that my USAA AmEx was issued by American Express and I wasn't even frequenting credit-related sites at the time so I wasn't any sort of credit expert by any stretch.  Due diligence is each person's responsibility.

Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.

Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
† Credit cards for FICO Score ranges: The score ranges are guidelines based on internal myFICO analysis of actual applicant approvals, and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range. These ranges were not provided by any card issuer.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.