topic Re: How does amex justify there higher fees? in Credit Cards

How does amex justify there higher fees?

Anonymous — Sat, 14 Feb 2015 16:33:21 GMT

for every transaction I mean. Is this why they are getting dumped by retailers.

Re: How does amex justify there higher fees?

Open123 — Sat, 14 Feb 2015 16:49:14 GMT

By having a spendcentric business model and closed loop system.

In general, Amex offers cardmembers higher rewards (mainly travel related) on spend than other issuers, which appeals to higher spenders. They ask Merchants for a higher fee (which is passed onto the cardmember as rewards) based on their ability with a closed loop system to have (1) a higher understanding of customer data points, and (2) greater control of the transaction process. And, by accepting Amex's higher fees, the Merchant will profit by being frequented by higher spending Amex cardmembers allowing for higher revenues.

The higher fees allow Amex to pass on more rewards to its cardmembers, which in turn encourages their cardmembers to use their Amex cards more. In addition, Amex's closed loop system and Merchant agreement allows for greater cardmember protection than other other issuer.

Re: How does amex justify there higher fees?

happypill — Sat, 14 Feb 2015 16:58:02 GMT

I think Amex's position in the marketplace has evolved in recent years. Not too long ago (I don't recall, within the last decade I think?) there was no such thing as a third party Amex card. The Amex network only processed Amex cards issued directly from Amex. Then, there was some lawsuit that forced them to open their network to third party issuers like banks & credit unions. Amex no longer had complete control over their entire system (cards, merchants, processing), and their pricing power has been eroding since.

Traditionally, Amex has provided the access to high-spend credit card users. I believe Amex issues far fewer cards than Visa or MC, but Amex is #1 in terms of total spend across their network. That will probably change once Costco leaves because that account for something like 8% of Amex cards and 10% of total spend on their network according to news articles. If Amex can't deliver additional benefits compared with Visa/MC, they will have to try to compete on price.

Re: How does amex justify there higher fees?

youdontkillmoney — Sat, 14 Feb 2015 16:58:14 GMT

@Anonymous wrote:
for every transaction I mean. Is this why they are getting dumped by retailers.

AMEX goes to businesses and say our cardholders have more money, are wealthier and spend more. Our customers have average incomes of $200K, or whatever. You would want them to spend money in your stores. That will eventually make up for the fees we charge. It took a while, but amex made a deal with in n out and now in n out takes amex. But a deal could not be reached with costco of late.

Re: How does amex justify there higher fees?

Open123 — Sat, 14 Feb 2015 17:04:56 GMT

@happypill wrote:
I think Amex's position in the marketplace has evolved in recent years. Not too long ago (I don't recall, within the last decade I think?) there was no such thing as a third party Amex card. The Amex network only processed Amex cards issued directly from Amex. Then, there was some lawsuit that forced them to open their network to third party issuers like banks & credit unions. Amex no longer had complete control over their entire system (cards, merchants, processing), and their pricing power has been eroding since.

This is true.

The accepted "pros" of Amex applies only to those cards offered by Amex directly as card issuer and payment processor, and not necessarily those offered by US Bank, Citi or BofA.

*Edited* PS - Even with cobranded issuers (meaning Banks issuing cards which is processed on the Amex network) rewars are generally higher than their Visa counterparts. For instance, Fid Amex has higher rewards than their Visa. BofA's old Amex had higher rewards than their Visa.

Re: How does amex justify there higher fees?

Anonymous — Sat, 14 Feb 2015 17:17:46 GMT

Does anyone know whatthe actual (or close) % of a persons tab goes to AMEX? I know it is more than V/MC but is it that bad?

Re: How does amex justify there higher fees?

dollar_bill — Sat, 14 Feb 2015 17:20:37 GMT

@Anonymous wrote:
Does anyone know whatthe actual (or close) % of a persons tab goes to AMEX? I know it is more than V/MC but is it that bad?

4% is what I've read.

Re: How does amex justify there higher fees?

Open123 — Sat, 14 Feb 2015 17:21:17 GMT

@Anonymous wrote:
Does anyone know whatthe actual (or close) % of a persons tab goes to AMEX? I know it is more than V/MC but is it that bad?

It differs and depends on the Merchant code and whether online or in person. However, in general, Amex is roughly 1.5% - 2.0% more than a similar Visa/MC fee for a similar transaction.

For larger Merchants (Safeway, Target, Walmart, etc...) because of the volume discounts, the differences are much less, if any.

Re: How does amex justify there higher fees?

Anonymous — Sat, 14 Feb 2015 17:22:13 GMT

Because they're the best!

Re: How does amex justify there higher fees?

Anonymous — Sat, 14 Feb 2015 17:23:13 GMT

@dollar_bill wrote:
@Anonymous wrote:
Does anyone know whatthe actual (or close) % of a persons tab goes to AMEX? I know it is more than V/MC but is it that bad?
4% is what I've read.

Oh wow, now I understand why the owner of one of my favorite places asked me to use a V or MC.

Re: How does amex justify there higher fees?

Open123 — Sat, 14 Feb 2015 17:25:47 GMT

@Anonymous wrote:
Because they're the best!

In addition to SPG points being the most valuable for certain people, the large purchase protection offered by Amex, because of their closed loop and one sided Merchant agreement, is without peer.

For this alone, even without rewards, I will only make large purchases (such as electronics) on my Amex cards.

Re: How does amex justify there higher fees?

Open123 — Sat, 14 Feb 2015 17:27:33 GMT

@Anonymous wrote:
@dollar_bill wrote:
@Anonymous wrote:
Does anyone know whatthe actual (or close) % of a persons tab goes to AMEX? I know it is more than V/MC but is it that bad?
4% is what I've read.
Oh wow, now I understand why the owner of one of my favorite places asked me to use a V or MC.

Right, which Merchants often do, but they cannot openly display the Amex accepted signage.

Re: How does amex justify there higher fees?

SomeGuyOnTheWeb — Sat, 14 Feb 2015 17:35:48 GMT

@Open123 wrote:
@Anonymous wrote:
@dollar_bill wrote:
@Anonymous wrote:
Does anyone know whatthe actual (or close) % of a persons tab goes to AMEX? I know it is more than V/MC but is it that bad?
4% is what I've read.
Oh wow, now I understand why the owner of one of my favorite places asked me to use a V or MC.
Right, which Merchants often do, but they cannot openly display the Amex accepted signage.

The periodontist that I have been frequenting for the past 7 or so months recently stopped taking AMEX, even though the sign was still on the door (luckily I was able to make a $770 charge before they did), on the basis that AMEX recently raised their fee to 4%. But they were more than happy to take the Discover, which I figured had to be somewhere close to AMEX. But I'm guessing not.

Re: How does amex justify there higher fees?

bigbang91 — Sat, 14 Feb 2015 17:36:45 GMT

@Open123 wrote:
@Anonymous wrote:
Because they're the best!
In addition to SPG points being the most valuable for certain people, the large purchase protection offered by Amex, because of their closed loop and one sided Merchant agreement, is without peer.

For this alone, even without rewards, I will only make large purchases (such as electronics) on my Amex cards.

Amex purchase protection is pale in comparison to Chase, for example the united xplorer

Re: How does amex justify there higher fees?

Open123 — Sat, 14 Feb 2015 17:42:19 GMT

@SomeGuyOnTheWeb wrote:
The periodontist that I have been frequenting for the past 7 or so months recently stopped taking AMEX, even though the sign was still on the door (luckily I was able to make a $770 charge before they did), on the basis that AMEX recently raised their fee to 4%. But they were more than happy to take the Discover, which I figured had to be somewhere close to AMEX. But I'm guessing not.

My Dentist (many service professionals) offers me a cash discount that exceeds CC rewards, which I gladly accept. With medical services or goods where Merchant protection is unnecessary (such as restaurants), I don't mind using cash or a non-Amex card.

Expensive luxury goods where an element of Merchandise and Merchant risk is involved is where I will refuse to purchase unless Amex is accepted.

Re: How does amex justify there higher fees?

Open123 — Sat, 14 Feb 2015 17:44:34 GMT

@bigbang91 wrote:
@Open123 wrote:
@Anonymous wrote:
Because they're the best!
In addition to SPG points being the most valuable for certain people, the large purchase protection offered by Amex, because of their closed loop and one sided Merchant agreement, is without peer.

For this alone, even without rewards, I will only make large purchases (such as electronics) on my Amex cards.
Amex purchase protection is pale in comparison to Chase, for example the united xplorer

With Chase, I have to deal with the issuers, Visa, and or MC. Amex decides solely, and their Merchant agreement, unlike Visa's, is completely one sided, where the Merchant doesn't even have a say on disputes. This is why Amex disputes are handled infinitely more efficiently than other Banks, regardless of their marketing and claims.

Re: How does amex justify there higher fees?

mikelo22 — Sat, 14 Feb 2015 17:51:57 GMT

@Open123 wrote:
@bigbang91 wrote:
@Open123 wrote:
@Anonymous wrote:
Because they're the best!
In addition to SPG points being the most valuable for certain people, the large purchase protection offered by Amex, because of their closed loop and one sided Merchant agreement, is without peer.

For this alone, even without rewards, I will only make large purchases (such as electronics) on my Amex cards.
Amex purchase protection is pale in comparison to Chase, for example the united xplorer
With Chase, I have to deal with the issuers, Visa, and or MC. Amex decides solely, and their Merchant agreement, unlike Visa's, is completely one sided, where the Merchant doesn't even have a say on disputes. This is why Amex disputes are handled infinitely more efficiently than other Banks, regardless of their marketing and claims.

This. Anytime I make a big purchase on a piece of merchandise, I always use Amex for this very reason--even if it means losing out a bit on cash-back rewards. Other CCC's can sit there and claim they have just as good cardmember protection as well, but I don't buy it one bit.

Re: How does amex justify there higher fees?

bz386 — Sat, 14 Feb 2015 21:06:02 GMT

I am curious what you base your belief on. Have you previously filed disputes with both Amex and Visa/MC to see how they compare? Can you share the experience? Personally I believe that the hype around Amex is just that - hype, largely based on times when Amex was the only CCC to offer such protection.

Re: How does amex justify there higher fees?

chwebb1 — Sat, 14 Feb 2015 21:14:30 GMT

@bz386 wrote:
I am curious what you base your belief on. Have you previously filed disputes with both Amex and Visa/MC to see how they compare? Can you share the experience? Personally I believe that the hype around Amex is just that - hype, largely based on times when Amex was the only CCC to offer such protection.

I think it depends on the bank. I've had to deal with Citi's and AMEX's extended warranty, and AMEX wins hands down. There were way too many hoops to jump through with Citi.

I've also dealt with AMEX, Discover's, Barclaycard's and Citi's dispute departments, and again, I'd say that AMEX, Discover's and Barclaycard's dispute departments are all roughly equally matched. I didn't have too many hoops to jump through with any of them (but they were for small amounts of money). I have had one unauthorized transaction for over $600 on my AMEX, and that was a breeze to deal with. So I do think that there are still benefits to using AMEX, but as long as you are with any prime bank, they should all be roughly as easy to deal with (because they know you have options).

Re: How does amex justify there higher fees?

Open123 — Sat, 14 Feb 2015 21:26:52 GMT

@bz386 wrote:
I am curious what you base your belief on. Have you previously filed disputes with both Amex and Visa/MC to see how they compare? Can you share the experience? Personally I believe that the hype around Amex is just that - hype, largely based on times when Amex was the only CCC to offer such protection.

Based primarily on the following:

1. Friends, family and colleagues who have made claims for various disputes.

2. Reading of others experiences on the net and various articles.

3. The nature of the Amex Merchant agreement.

Fortunately, aside from rental car insurance (which was easier claiming with Amex than Visa, but not relevant here), I've never had first hand experience with fraudulent charges, disputes with Merchants, or any aspect of purchase protection. I've had AUs and colleagues on our business cards make various claims which were credited with very little fanfare and paperwork, relative to what would have required with Visa, MC or Discover.

Over the years, just reading the various experiences from others on the internet would be similar to what I've experienced and see around me. Of course, everyone on the net could be lying, but when you have a majority of user experiences over many years recount a similar experience, you lend more credibility to it, though it's only anecdotal.

Finally, from the last Merchant agreement I've read, it is extremely one-sided. Since Amex has full control of the transaction from beginning to end, there is no intermediary in the cardmember transaction. Unlike, say, Chase who must work with Visa/MC on disptues, Amex doesn't. Amex's Merchant agreement states that during a dispute, they may, at their sole discretion, rule in favor of a cardmember without consultation or right of appeal from the Merchant.

As a consumer, should I ever need to make a dispute when it matters (not the small charges any issuer will reverse), I'd rather take my chances with Amex.