AMEX Needs to Think Local

[Open123]

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@IgnatiusReilly wrote:
As Amex has expanded to markets it did not have/want 15 years ago, acceptance has become more of an issue. I doubt they will reduce swipe fees so they need to refocus on rewards and the high end customer who is the traditional customer Amex targeted.

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From your perspective, having lost the first round of the DOJ lawsuit, though I think this decision will be reversed in the Appellate courts, do you think this is still a viable course for Amex to prosper in the future?

[IgnatiusReilly]

Open, I haven't worked there in a long time but I was in meetings with several hundred other VPs, and DOSs when Harvey Golub and Ken Chenault both said lower swipe fees was not an option. I suspect Amex will litigate the hell out of it because they likely view it as an existential threat.

[IgnatiusReilly]

Open, to answer your other question: beats me. My understanding is that Sr. Mgmt fumbled negotiations with United and American with a cobranded card and had to "settle" for Delta. I think the prestige of the Platinum card has been eroded by the Ritz card and even CSP among others. Without really good perks, $495 is a pretty steep price for the ability to impress a server.

[DantGwyrdd]

It's a little off topic, but I've spent a lot of time recently in central and southern Europe and it seems like the Amex acceptance here is actually higher than in the US, but this, of course, could just be a matter of perception as I've mostly been in the major cities here as opposed to the US where I've mostly lived in smaller places. Interestingly, in the places I've been in central/southern Europe, if a store accepts only one type of card, that's almost always Visa.

[Gunnar419]

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@Anonymous wrote:

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@Gunnar419 wrote:

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There's something I don't get about Amex's infamously high swipe fees (the reason so many small businesses don't take their cards). Supposedly the big fees are to fund superior rewards, but these days Amex reward programs aren't any better for most of us ordinary cardholders than the rewards on the other three types of card. Don't get that.

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The justification for high swipe fees, to the merchants, was never superior rewards, why would a merchant care that they are paying more to give a customer great rewards!   The value proposition is/was that Amex customers are more affluent and will spend more in your store, so the higher swipe fee is money well spent.

As Amex has increased its down-market penetration, this is probably no longer so true (though the affluent customers will still remain).   And for certain stores, small groceries rather than art galleries for example, it's probably unconvincing, as no-one is going to spend lots of money, however rich they are, so the extra fee will seem a waste.

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LTL, didn't mean to imply that the high swipe fees were in any way appealing to the merchants, only that the high swipe fees were justified by Amex as being necessary to give superior rewards to cardholders. And yes, of course the argument to the merchants was, "We bring you superior customers who'll spend more money with your business."

That appears to have been true in the past, but I suspect it's less true now that Amex has gone downmarket. So since the comparatively huge swipe fees clearly aren't funding superior rewards programs these days, what on earth can justify them?

Of course in places like the one where I live, there never were any superior customers in the first place, just locals of mostly so-so economic backgrounds, small business owners, blue collar types, retirees and the like. I'm serious when I say that local business people often hate Amex. Ask if they take Amex and as often as not they won't just say, "No, sorry." They'll say something like, "No, sorry. They charge us ridiculous fees that take too big a bite out of every sale. If we took Amex, we'd have to raise our prices."

[Anonymous]

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@NRB525 wrote:

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@Anonymous wrote:

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@atd1970 wrote:

@NRB525

Again, why should I have to ask?

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You really are approaching this poorly.  Maybe you should have asked before you applied for the card.  I'm sorry but the problem lays with you, not American Express

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The merchant is really only obligated to accept greenbacks, cash bills, as payment "valid for all debts public and private".

The merchant is doing you a favor by accepting one of your CC as payment, and many don't want or haven't signed up for, AX.

Think of it as travelling in a less developed country. It's an adventure finding out which CC will work, and whether your cell phone gets reception.

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Actually, this is a common misconception. That statement on currecncy does not mean that the merchant is required to accept it. There is no law that stipulates that, and a merchant is perfectly free to reject cash as a payment form.

[Open123]

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@IgnatiusReilly wrote:
Open, I haven't worked there in a long time but I was in meetings with several hundred other VPs, and DOSs when Harvey Golub and Ken Chenault both said lower swipe fees was not an option. I suspect Amex will litigate the hell out of it because they likely view it as an existential threat.

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Thanks!

I was particular interested in views of those who had, but are not currently, worked for Amex.

[BarryNTexas]

Interesting gripe session...  are we talking about choice of carrying their card or investing in their stock?

Funny that no one complains about the backdating practice or the fact that when rebuilding the AMEX approval is a golden star.  And have only seen one member mention that Discover is not 100% accepted as well and in my experience is "hit or miss" as much as AMEX.

Love the freedom of choice and would expect those that hate Amex to cancel them pronto? 

[Open123]

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@BarryNTexas wrote:

Interesting gripe session...  are we talking about choice of carrying their card or investing in their stock?

Funny that no one complains about the backdating practice or the fact that when rebuilding the AMEX approval is a golden star.  And have only seen one member mention that Discover is not 100% accepted as well and in my experience is "hit or miss" as much as AMEX.

Love the freedom of choice and would expect those that hate Amex to cancel them pronto? 

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Personally, I suppose we all have our biases.  For many reasons, I've alwasy been partial to Amex, and suspect they will be my card of choice to the very end, regardless of what happens in the future.  if for no other reason, I simply just "like" Amex better than any other Issuer period.  

As to their stock, I find most of the bad news already discounted in its price.  In general, once all the analysts downgrade (in general, buy on downgrades, and sell on upgrades), the price is at a point where it's ideal to being taking a position, which is why I'm primarily interested in the views of those who had worked for, but do not currently, Amex on how strong the current spendcentric model is in their corporate culture.

[Anonymous]

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@BarryNTexas wrote:

Interesting gripe session...  are we talking about choice of carrying their card or investing in their stock?

Funny that no one complains about the backdating practice or the fact that when rebuilding the AMEX approval is a golden star.  And have only seen one member mention that Discover is not 100% accepted as well and in my experience is "hit or miss" as much as AMEX.

Love the freedom of choice and would expect those that hate Amex to cancel them pronto? 

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In what way is it a golden star?

And in the US many more stores (around 2M more) accept discover than accept Amex.