This would be a bit of a detractor for me, Amex is not as widely accepted, especially when traveling in Europe. Mastercard is accepted virtually everywhere in the EU and UK.
If the Amex partnership includes global (or at least, European) expansion (which seems more plausible than with GS), it may generate extra pressure on vendors to accept it. iPhone market share is quite high in Europe(~35%), and I’d guess mostly comes from high spending sectors (e.g. 56% in Swirzerland, 50% in UK). I would try to attract their business.
It would definitely help Amex, but I'm not convinced that Apple would inflict the significantly worse acceptance on themselves without significant upside.
The Apple card was only available in USA. So market share abroad is not really relevant. Card margins are much lower elsewhere so its not such an attractive product.
There's little incentive to change. Retailers also know their clients who use Amex, are aware how little it is accepted and are likely to have a backup alternative they can just use.
This is not true. Anyone in the US who has told you this is confused or getting ripped off by a predatory ISO (the companies that offer credit card processing).
Numbers below are only looking at the percentage, not the flat per txn fee or the other fees like assessments, etc... Only apply to the US. Also assuming you do less than 1 million a year in card volume.
First let's look at actual merchant services costs:
Stripe, Braintree/PayPal (online) you pay the same fee for all cards. Around 2.90%
Wells Fargo (in-person) charges the same rate for all cards until you are high volume. Around 2.40%
Chase (in-person) charges the same rate for all cards until you are high volume. Around 2.60%
Bank of America (in-person) charges the same rate for all cards until you are high volume. Around 2.65%
Now let's look at the actual amount the card issuer charges for a restaurant to accept a card (assuming you're working with an ISO that does OptBlue, all the above do). The markup you pay your merchant services provider is added on top of this.
The difference is not that high. In fact, my understanding is “Visa Signature” and “World Mastercard” (which are most of the premium credit cards) normally cost about the same as Amex. At worst it may be about 1% more not double.
"payment cards" includes debit cards, credit cards, and other types of cards that can be used for payments, such as the German girocard standard. There's no meaningful difference between these products if your locale has working consumer protection laws.
The payment processors I'd be looking at offer merchants rates of 0.125% for girocard, 1.39% for VISA/MasterCard, and 6.2% for AMEX.
High fees are what Apple uses to offer such “great benefits” with their existing card. If they want to expand to Europe, the only cards enabling that would be Amex, or Diners (which is even less accepted I think).
The fact the Apple card was a Mastercard and had no foreign transaction fees was largely the only reason I opened it, as I too find my Amex a pain in the ass in Europe. If it does become an Amex card, I will likely close the account.
In an FX transaction, what is the difference between a trading fee and a wider spread? Nothing. (Why do people keep falling for this?)
What you really want to see is a combined promise. For example: No fees, plus 1% or less FX spread on major currencies. (My preferred credit card promises that.)
Honestly, it is very hard to pay a total of less than 1% on foreign transactions. Still, this is pretty cheap, given the convenience.
The FX spread is fixed at around 25-50bps for Mastercard/Visa due to a settlement long ago. The foreign transaction fee is an additional charge on top of that, usually 3% of the gross transaction volume in USD.
The banks don't control the exchange rate, it's determined by the card network. So yes, when a card advertises 0% foreign transaction fee, it really does mean that they don't take an additional charge on top of the spread (which they don't control or profit from).
It's in fact quite easy to pay less than 100bps for a foreign currency transaction; everybody with a 0% FTF card is doing it right now (especially for high volume corridors like EUR/USD).
> No fees, plus 1% or less FX spread on major currencies. (My preferred credit card promises that.)
You bank can't promise what they don't control; Visa and Mastercard determines FX rates, and they're below 100bps because of an old settlement. So the bank is promising you something they had no role in creating; you're the one here falling for the marketing, not everybody else.
I think as a card provider you still make money on this, from what I remember the card provider can settle directly with the scheme for foreign transactions the next day. There's still a good margin on the mastercard rate, I've definitely observed more than 50bps spread, but that's GBP -> THB etc.. Would a fulltime forex trader cost more though?
> Honestly, it is very hard to pay a total of less than 1% on foreign transactions.
I would argue that you are not looking hard enough if you're paying 1% on FX card transactions.
All you need is a multi-currency card from one of the Fintechs, that will get you down to 0.5% or less without any effort.
Of course if you're the sort of person who likes taking cash out of ATMs on holiday then you'll have to look harder, since there is usually a surcharge on ATM withdrawls. But even then its not impossible.
In France, the fees required to accept Amex are still way higher than MC/VISA. They are still not widely accepted and not a lot of persons know about Amex.
The fees are higher everywhere. Their pitch is "our fees are higher, but we have higher-end customers who spend more", which roughly tracks with reality. But a hot dog stand isn't gonna have whales but an upper-end store might, so it's not surprising to see less support it.
High-end businesses accept Amex, because it's worth it. Major chains can probably negotiate good deals. Tiny/seasonal businesses often use middlemen like Zettle that charge high fees and accept almost every payment method imaginable. Those in the middle who use traditional payment terminals and pay list prices may still avoid Amex due to the high fees.
I thought the EU had regulations on credit card fees? As I understand it, the Amex isn't widely supported because Amex's fee-heavy business model wouldn't be allowed to launch.
Visa's highest tier cards (Visa Infinite cards, such as the Chase Sapphire Reserve), already have higher fees than the Amex Platinum. The difference is, Visa won't let merchants ban single cards (you have to accept ALL Visa cards), while banning Amex meaning you are banning mostly high tier cards and losing nothing on the low end.
At least it might solve an issue a friend of mine has. He really wants an AMEX card, due to traveling, but you can only get corporate cards here, AMEX doesn't deal with private individuals and won't issue you a card. I suppose he can just get an Apple card then.
The beauty if going with AMEX, if that's what they'll do, it that it's a one stop shop. No need to go through a bank to issue a credit card, just deal with the credit card company directly. Currently the card is pretty much useless, but it does fit Apples way of doing things, cutting out the middle man.
For American Express it could also help make them relevant as a card company again. If they have plans to expand beyond the US, this might be a good way to do it. Companies will want to be able to accept Apples card, even if that means signing up with AMEX. Then in a few years, AMEX can start pushing their own branded cards which will now be more widely accepted.
Interesting. I had zero issues using my Amex in France and Switzerland this past summer. In fact, there was only one restaurant that I visited that wouldn't take it. I must have been lucky.
Edit: typo