American Express Offering Bonuses to Businesses to Boost Acceptance
For years American Express has lagged behind competitors Visa and Mastercard when it comes to acceptance. Part of the reason for this is that Amex had typically charged higher swipe fees — a result of the issuer focusing on a wealthier client base who would be more valuable to businesses. However in recent years Amex has tried to catch up, getting as many businesses as possible to start accepting their cards. According to a report from The Wall Street Journal, these efforts have sometimes even included cash bonuses paid to merchants.
As of last year American Express was accepted at 10.3 million locations in the United States, which is about 1.3 million fewer than Visa and Mastercard. Back in 2016, Amex told shareholders that it would close the gap between them and their competitors by the end of this year. To do that, the Journal says Amex has been paying out bonuses ranging from $2,500 to $450,000. While several small businesses have been on the card issuer’s list of holdouts to convert, the top payouts have gone to larger merchants. This is all part of what has reportedly been called the “Parity Push Project.”
Beyond the cash payments, Amex has also been working with businesses on swipe fees. In the case of Exxcel Gymnastics and Climbing co-owner Tatiana Kamarskaya — who’s gym had previously not accepted Amex due to their swipe fees — she says American Express offered her a $15,000 bonus along with a pledge to match Visa and Mastercard’s fees. Similarly New Haven, Connecticut business owner Ralph Carlo told the paper he ended up with a $7,500 bonus (up from Amex’s original $2,500 offer) and the promise of lower swipe fees. The Journal notes, given the pace of American Express sales Carlo’s business saw in the second half of last year, it will take the card company six years to recoup the bonus they paid out.
While it might sound like Amex is handing out big bonuses to all kinds of small businesses, it’s worth noting that they’ve reportedly only made such arrangements with 133 businesses since 2018. Therefore the more interesting takeaway is that the company is working to lower their swipe fees, which could be a bigger benefit to small business customers. Then again, with many merchants now opting for all-in-one solutions such as Square, these individual issuer swipe fees may not be as impactful. In any case, while you probably shouldn’t count on getting a five-figure payout from American Express this Small Business Saturday, it’s nice to know you may have some leverage if they do come calling in the future.
Also published on Medium.