Sunday, November 9, 2008

Nothing personal, just business...Should we stop accepting the American Express card?

I got a $5400 bill the other day from American Express.

$5400 for one month.

Why? Its their fee for allowing us to accept AMEX at the business--and its not right.

When we process an AMEX card for a client, we don't see the funds for at least four business days. That is four days that American Express gets our funds--interest free.

In contrast, when I run a Visa or Mastercard transaction, our funds post to our account at midnight the next business day. And our rates are about 32% less.

So, if I have this straight--I am paying a huge premium for a large corporation to take advantage of us by getting a short-term interest free loan.

Its not as if small businesses haven't had run-ins with American Express before over other issues. Do a Google search on all the small business credit lines that they are drawing down:

My question is this: Should we draw down on American Express?

American Express--if you are listening--I suggest you call me ASAP. You have a very dissatisfied customer.

(916) 760-0032

Update: Lots of angry people responding to this New York Times article


Ed McNichol said...

Right on the mark Torrey. When I negotiated a large purchase recently, the vendor made it clear that the deal was based on me paying with something other than an AMEX card.

Anonymous said...

One thing you should keep in mind is the customer base you'll get by accepting Amex cards. Compare to other credit card issuers, Amex is known to have an affluent costumer base. Many Amex loyalists carry only amex cards and/or would rather walk out of a store than to pay with a non-Amex card.

While Visa and Mastercard seem to have lower rates than Amex, they also have more complex rate cards. Amex is much up front and straightforward with their rates. Visa and Mastercard however, charge a different rate for different card products they have. You should probably call amex to express your dissatisfaction. They do have amazing customer services, and may be able to work something out with you. Just my 2 cents out of personal experience, hope it helps!

Anonymous said...

I’m a little bipolar on the subject, but I feel your frustration. One option is to continue accepting American Express to capture purchases by the more affluent customers, but add a surcharge to cover the cost of the transaction. In today’s economy, I bet even well-to-do Amex cardholders will consider a discount if the transaction is completed as a cash, VISA or MasterCard transaction.

As it stands, you’re paying for the customer's "bonus points". If the Amex cardholder wants his or her bonus points, he or she will have to pay the premium.

Alternatively, you could assume all transactions will be paid for via Amex and price products and services accordingly. Then you could advertise a discount for cash, VISA or MasterCard.

“Save [X]% when you use your VISA or MasterCard,” is a more positive message than, “10% surcharge for all American Express payments.”

Anonymous said...

Dump them. I dumped my AMEX cards long, LONG ago. Almost all of my preferred vendors accept my POs and offer net 30 discounts. I use my corporate Visa debit card for the rest and sometimes even break out the ol' check book. In fact, except for restaurants, I can't even remember the last time I saw an AMEX logo at the businesses I frequent.

But before you cut them off, pull your receipts and ID any big *profitable* clients that prefer paying by AMEX. Use this as an opportunity to pick up the phone or pay them a visit. Find out if pulling AMEX will cost you their business. I'd be quite surprised if any of them objected. (Because they value YOUR service to them much more than AMEX's, right?)

If you still feel like there's too much risk, call AMEX. Tell them their merchant fee is outrageous and you'd like to close your merchant account. See how far they'll go to keep your business. Remember: they work for you. Treat them like the ungrateful, unproductive employee they are.