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American Express is lowering the fees it charges to retailers and merchants to process card payments, the company recently said in an investor presentation. The new cuts will make the merchant fees the lowest they have been in nearly 20 years and are part of a recent push to make Amex cards more widely accepted by various locations.
Amex told investors at a presentation in New York that it’s planning to cut its merchant fees by about 2.37% globally, the fee’s sharpest decline since 1998, The Financial Times reports.
According to FT‘s calculations, the reduction in fees will amount to roughly a $585 million loss in profits for the company. Amex CEO Stephen Squeri, who took the helm of the credit card company in February, told investors he is willing to make “conscious tradeoffs” in order to make Amex cards more widely accepted. Because of its higher merchant fees, Amex cards are accepted at about 1.3 million fewer US locations than rivals like Visa and MasterCard. That number includes the 1.5 million US locations Amex added last year that now accept its cards.
“Any reduction in the fees help — but American Express, and all the major networks, have a long way to go,” Doug Kantor, a lawyer who represents the Merchants Payments Coalition, told FT. Smaller retailers and locations might still be hesitant to accept Amex, he said.
Amex’s corporate partners, like Delta and Hilton, are also lobbying for better a better deal, John Hect, consumer financial analyst at investment bank Jefferies, told FT. He noted: “Retailers have become really aggressive at pushing back.”
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