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.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Rocket Companies Introduces Rocket Visa Card for Homebuyers

Rocket Companies — the parent company of Rocket Mortgage, Rocket Homes, Rocket Loans and Rocket Money — is now adding a branded credit card to the mix. This week, Rocket introduced the Rocket Visa Signature Card. Not only will the new offering integrate with Rocket Money but will allow cardholders to earn up to 5% back. With the Rocket Card, customers can earn 5 Rocket Rewards on every purchase they make....

Robinhood Partners with Capitalize for IRA Rollover Feature

In January, the popular investment app Robinhood officially introduced its IRA program Robinhood Retirement. Now, ahead of this year's tax deadline, the company has announced a partnership with Capitalize that will make it easier for customers to transfer their existing IRAs and 401(k)s over to the platform. As a result of the partnership, Robinhood Retirement users will be able to find legacy 401(k) accounts and roll them over into a...

Survey: Consumers Want Financial Recommendations from Banks

Since the advent of online banking, it's been easier for customers to check their balances, make transfers, and conduct other transactions from their computer or smartphone. However, a new survey highlights the fact that banks could be doing more with their digital platform to please customers. According to a Sopra Steria and IPSOS report, nearly 70% of banking customers want their institutions to provide more personalized financial recommendations that can...