Here’s what American Express is doing to get more businesses to accept your card
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
Picture this: You’re at the neighborhood corner store stocking up on junk food and ice cream as you prepare to settle in for the night with Netflix. You approach the cashier, they ring up your stuff, and you whip out your shiny American Express card. Before you can even hand over your card they say, “Sorry, we don’t accept American Express.” Disheartened, you either fork over another card or put your items back.
If you hold an American Express card, this is probably a scenario you’ve faced. But if Amex has its way, you may experience less of it.
According to a report from the Wall Street Journal, the company is offering bonuses to some businesses that don’t take Amex cards as it competes with Visa and Mastercard. The payments have ranged from under $10,000 to about $450,000, the Journal reported. The Journal says that more than 100 small businesses have received the sign-on bonuses since 2018. Amex representatives have even visited some businesses in person in an effort to convince them to accept its cards and the company has tied its sales force’s bonuses to the effort.
Since 2017, more than three million businesses started accepting Amex cards. Of those, Amex says that 133 merchants deemed “strategic priorities” received a sign-on incentive, a tiny fraction of 1% of the new merchants the company brought on. The company says the businesses had to sign an agreement that required them to enable Amex acceptance in all their locations (if they have more than one.) The company says the incentives intended to help defray costs like train staff on new technology and to reprint signs.
The company has long struggled to level the playing field with its competitors Mastercard and Visa. Famously, American Express isn’t accepted at many smaller or family-owned merchants, with the Journal reporting that Visa and Mastercard are accepted at over a million more U.S. locations than Amex.
As TPG’s Ethan Steinberg wrote earlier this year, the cost for merchants to accept Visa and Mastercards has risen, while the cost to accept Amex has decreased over the last 10 years. Amex has also invested in fraud prevention capabilities and other business tools such as Shop Small/Small Business Saturday and Amex Offers. Amex also launched OptBlue, which was created to remove the hurdles associated with accepting Amex cards.
American Express also says that some merchants don’t accept Amex in the U.S. because of the perception of higher fees. Most merchants can accept American Express and on average, there’s little cost difference between Amex, Visa and Mastercard.
According to a Nilson report, Amex customers spend on average 3.1x a year more than non-Amex customers. The same report also showed that Amex customers spend an average of $14,000 a year on their cards.
Featured image courtesy of Wyatt Smith/The Points Guy
Welcome to The Points Guy!