How does amex justify there higher fees?

[Anonymous]

Everyone balks at what amex charges... as a business owner I did too.  I then found that the studies are true.  Amex customers are likely to spend a lot more money with you.  Amex is hard to get.  They don't give them to just anyone.  Usually you have to have a good credit score, income etc.  They charge it because they know they can.  I actually advertise in my business that Amex is prefered.  It has led to much higher sales.  As for the fees, i went with the Amazon Local Register acct and got their 1.7% fee so that includes Amex too.  

[nyancat]

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@Anonymous wrote:

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

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It depends on the retailer, but for many businesses Amex can be less expesive than Visa and Mastercard in terms of real cost of acceptance. It's hard to get the best Visa and MC rates. If you market mainly to the poor and uneducated, AND are on interchange-plus pricing, you'll get great Visa and Mastercard rates. Otherwise, it's not nearly so clear.

[nyancat]

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@Anonymous wrote:

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@dollar_bill wrote:

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@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?

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4% is what I've read.

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

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Report them at takeamex.com

Not only is that against their agreement if they accept Amex, it's probably based on false knowledge of the rate they're actually paying.

[Anonymous]

I still like amex but I do worry a little about merchants dropping them due to the fees. I think and this is just theory but amex may have to change the business model slightly. Probably strive to gain more cardholders(which they seem to have done over the years) while lowering merchant fees somewhat in certain cases. The one thing that really keeps me with them are the high credit lines and without a doubt amex lets me charge more than any other card bar none. Ive charged over my credit line on the everyday card without a problem so it definitely has some nice spending power. 

I view it as any business that needs tweaking to stay as competitve as possible. If I was amex I would cater to the rich and also cater to the average joe cardholder and I would even have a couple lower credit products to cover all bases. The catch 22 is if they take lower fees the rewards could get cut drastically and that can alienate long term customers. Should be interesting to see what amex does in 2015

[pipeguy]

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@nyancat wrote:

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@Anonymous wrote:

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

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It depends on the retailer, but for many businesses Amex can be less expesive than Visa and Mastercard in terms of real cost of acceptance. It's hard to get the best Visa and MC rates. If you market mainly to the poor and uneducated, AND are on interchange-plus pricing, you'll get great Visa and Mastercard rates. Otherwise, it's not nearly so clear.

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I'm staying out of this thread as I have a known and admitted bias against AmEx (almost 40 years as a merchant with AE/MC/Visa/Disc experience) and over that as a CC user. That said I find the highlighted statement above "insulting" and just wrong in several ways, but I'll leave it at that. 

[Anonymous]

Well I think the credit card model will pretty much have to support all types, rich and poor and that includes amex and any other issuer if they want the most business possible. There are too many options for amex to cater to just the rich in my opinion. 

We have seen a few big accounts drop or either not work out a deal with amex so their model needs tweaking I would think.

[Open123]

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@nyancat wrote:

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@Anonymous wrote:

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@dollar_bill wrote:

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@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.

---

Report them at takeamex.com

Not only is that against their agreement if they accept Amex, it's probably based on false knowledge of the rate they're actually paying.

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So long as the Merchant does not display the Amex signage, he/she is free to accept or refuse any form of payment at his/her discretion.  A shop may refuse Amex for one customer, while accepting it for another who buys a higher profit margin, or offer a discount for non-Amex tender.  However, if the Amex signage is displayed, the Merchant cannot refuse or otherwise suggest another form of payment be used when presented with an Amex.

Of course, any shop owner should have free reign to run his/her business.  

However, it would be unfair to display the Amex signage to attract Amex cardmembers only to steer them to using Visa/MC.  This is not only a violation of Amex's Merchant agreeemtn, but also a clear example of unfair and predatory business practice.

[Open123]

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@Anonymous wrote:

Well I think the credit card model will pretty much have to support all types, rich and poor and that includes amex and any other issuer if they want the most business possible. There are too many options for amex to cater to just the rich in my opinion. 

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Since electronic payments have become mainstream, all prices of goods already have CC fees factored into them.  

Anyone who relies solely on cash is overpaying for their goods and thereby subsidizing (transfer of wealth) those who earn CC rewards and CC company coffers.  Unless or until we have a system to reflect an across the board cash discount, CC issuers should be as inclusive as possible.  Of course, there are minimum requirements and not everyone is entitled to the highest tiered cards, but acceptance should be broad and as inclusive as possible.

I sense Amex and other issuers realize and have product offerings catered to include a wider demographic now than ever before.  This is a good thing; because, in the end, everyone benefits from inclusion.

[Anonymous]

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@Open123 wrote:

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@Anonymous wrote:

Well I think the credit card model will pretty much have to support all types, rich and poor and that includes amex and any other issuer if they want the most business possible. There are too many options for amex to cater to just the rich in my opinion. 

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Since electronic payments have become mainstream, all prices of goods already have CC fees factored into them.  

Anyone who relies solely on cash is overpaying for their goods and thereby subsidizing (transfer of wealth) those who earn CC rewards and CC company coffers.  Unless or until we have a system to reflect an across the board cash discount, CC issuers should be as inclusive as possible.  Of course, there are minimum requirements and not everyone is entitled to the highest tiered cards, but acceptance should be broad and as inclusive as possible.

I sense Amex and other issuers realize and have product offerings catered to include a wider demographic now than ever before.  This is a good thing; because, in the end, everyone benefits from inclusion.

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That is a really interesting thought. Personally, I don't use cash at all. If I have cash, I avoid using it until I can hit up a cash machine to deposit. I like keeping track of my budgets too much to screw it up with random 20's lying around. I see cash as more of a novelty now. Like CD's. The industry has completely gone digital and if my iphone can not preform its funtion I don't have room for it. 

[Imperfectfuture]

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@Anonymous wrote:

Everyone balks at what amex charges... as a business owner I did too.  I then found that the studies are true.  Amex customers are likely to spend a lot more money with you.  Amex is hard to get.  They don't give them to just anyone.  Usually you have to have a good credit score, income etc.  They charge it because they know they can.  I actually advertise in my business that Amex is prefered.  It has led to much higher sales.  As for the fees, i went with the Amazon Local Register acct and got their 1.7% fee so that includes Amex too.  

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Oooohhhh, nice info to have.  Will look into that (was going to use someone else).  Though this is seriously later this year or next year.