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by petemir 941 days ago
I hate that it works this way, but perhaps an Apple-Amex deal is what is needed for businesses to start accepting Amex.

Edit: typo

3 comments

What would that change?

Amex acceptance in the US is basically ubiquitous, and how would a new type of Amex change things abroad?

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.

That upside might be Amex's uncapped EU credit card interchange, but that would very likely not apply to a co-branding scheme with Apple: https://www.headforpoints.com/2018/02/08/american-express-eu...

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.
lower fees is what is needed for businesses to start accepting amex.

visa and mastercard are 2-3%, amex is 5-6%. there's no upside for merchants to accept transactions where they have to pay double the processing fees

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.

Amex: 1.60% - 2.85%.

Visa: 2.10% - 2.70%.

MasterCard: 1.85% - 2.00%.

This reply is awesome. How do you know all of this?
MasterCard and Visa openly publish this information. I can't easily find a similar reference for AmEx, but this isn't secret.

https://www.mastercard.us/content/dam/public/mastercardcom/n...

https://usa.visa.com/content/dam/VCOM/download/merchants/vis...

I’ve worked in payments for a long time (I did payments at Amazon, Lyft, and Blizzard). Also used to run a company similar to Stripe.
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.
You're correct, take a look at my other comment for a breakdown.
Compared to european payment cards with their 0.125% total fees, Amex' 6-7% is a steep ask.
The highest Amex interchange rate is about 3%. https://www.creditdonkey.com/interchange-rates.html
Merchant rates from local payment processors are: 0.125% for Girocard, 1.39% for VISA/MasterCard, 6.2% for AMEX
It's nowhere near 6-7%. See my other comment for more details.
Payment cards that only have a 0.125% fee? Are you talking about a debit card or a payment / credit card?
"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.

Card fees are capped in EU, and I wonder if amex has any way of going around that. (0.2% debit, 0.3% credit)

https://eur-lex.europa.eu/EN/legal-content/summary/fees-for-...

Yes, they go around that because they are considered a “three-party scheme”

https://politics.stackexchange.com/questions/48519/why-are-a...

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).

Diners is accepted everywhere Discover is. It's smaller than AmEx, probably, but it's all over Korea, for example.