How Bad Will It Get for American Express? • Hacker News Board

Re: How Bad Will It Get for American Express?

#11

Post by ulysses » Fri, Oct 16, 2015, 4:08 PM UTC

magic_beans wrote: post #8

eggoa wrote: post #5

For something as fungible as credit card transactions, it's hard to understand how a "brand" could be truly valuable. (Or is the grocery store cashier secretly really impressed when I produce my Amex Blue?)

I've live in New York and I've literally never been to a single bar or grocery store that accepts American Express. Anyone know why this is?

For regular businesses, the transaction fees (both % and per transaction) are higher for AMEX than VISA or Mastercard. So a lot of small businesses don't take them.

With some processors, there's also a monthly fee if you take any AMEX, so it's better to not take it all.

Re: How Bad Will It Get for American Express?

#12

Post by enahs-sf » Fri, Oct 16, 2015, 4:09 PM UTC

cm2012 wrote: post #3

This is typical modern Bloomberg reporting - telling a misleading, emotion driven story from anecdotal data and rumors. "The Amex people, most of whom had MBAs, sometimes found it amusing to deal with Costco veterans who spoke about starting out stocking warehouse shelves. Less endearing was the habit Costco executives had of referring to Amex as a “vendor.” That made the Amex people seethe. After all, they represent…

The Young Thug reference raised an eyebrow for me

Re: How Bad Will It Get for American Express?

#13

Post by Sanddancer » Fri, Oct 16, 2015, 4:09 PM UTC

magic_beans wrote: post #8

eggoa wrote: post #5

For something as fungible as credit card transactions, it's hard to understand how a "brand" could be truly valuable. (Or is the grocery store cashier secretly really impressed when I produce my Amex Blue?)

I've live in New York and I've literally never been to a single bar or grocery store that accepts American Express. Anyone know why this is?

Amex charges higher fees per-transaction. Because they're a charge card, they make their money off the transaction fees, and not off the interest rates a card accrues. Conversely, this means they have to charge more on the front-end to maintain profitability.

Re: How Bad Will It Get for American Express?

#14

Post by zyxley » Fri, Oct 16, 2015, 4:09 PM UTC

magic_beans wrote: post #8

eggoa wrote: post #5

For something as fungible as credit card transactions, it's hard to understand how a "brand" could be truly valuable. (Or is the grocery store cashier secretly really impressed when I produce my Amex Blue?)

I've live in New York and I've literally never been to a single bar or grocery store that accepts American Express. Anyone know why this is?

2.5% transaction fees instead of 2%.

The average grocery store has a profit margin of 1% to 3%, from what I understand.

Re: How Bad Will It Get for American Express?

#15

Post by crisopolis » Fri, Oct 16, 2015, 4:09 PM UTC

Article references Costco getting bummed that their customers could use VISA in plenty of places and that's correct. However, I'm an AMEX cardholder and I've yet to run into a place who doesn't accept AMEX.

However, Costco is right AMEX is just a vendor and if they can find cheaper or better vendor with benefits then more power to them.

Re: How Bad Will It Get for American Express?

#16

Post by adamgray » Fri, Oct 16, 2015, 4:11 PM UTC

magic_beans wrote: post #8

eggoa wrote: post #5

For something as fungible as credit card transactions, it's hard to understand how a "brand" could be truly valuable. (Or is the grocery store cashier secretly really impressed when I produce my Amex Blue?)

I've live in New York and I've literally never been to a single bar or grocery store that accepts American Express. Anyone know why this is?

Higher fees.

FWIW I live in Chicago and rarely find a place that doesn't accept AmEx.

Re: How Bad Will It Get for American Express?

#17

Post by nlawalker » Fri, Oct 16, 2015, 4:11 PM UTC

eggoa wrote: post #5

For something as fungible as credit card transactions, it's hard to understand how a "brand" could be truly valuable. (Or is the grocery store cashier secretly really impressed when I produce my Amex Blue?)

Yeah, this struck me as odd:

> Who cares what card you have if you’re paying for your expensive meal through your smartphone’s digital wallet?

Digital payments didn't kill Amex-as-a-status-symbol, the productization and growing availability of credit cards of all brands did. A status symbol brand doesn't send unsolicited junk mail asking for people to sign up for its product.

Re: How Bad Will It Get for American Express?

#18

Post by vox_mollis » Fri, Oct 16, 2015, 4:11 PM UTC

JoshTriplett wrote: post #6

AdmiralAsshat wrote: post #4

I was really bummed when I found out that the Costco Amex card was getting cancelled, as I was thinking about getting one. But having read the article: good. I'm glad Costco did not hesitate to tell them to take a hike when they found a better deal.

The Costco Amex vanishing seems like no big deal. However, Costco refusing to take Amex for payment at all introduces far more inconvenience.

Costco was giving away 0.6% swipe fees to AMEX. If they accepted AMEX as "just another payment method" without the partnership, that rate would quadruple.

Re: How Bad Will It Get for American Express?

#19

Post by maxerickson » Fri, Oct 16, 2015, 4:11 PM UTC

Sanddancer wrote: post #13

magic_beans wrote: post #8

Earlier quoted context omitted.

I've live in New York and I've literally never been to a single bar or grocery store that accepts American Express. Anyone know why this is?

Amex charges higher fees per-transaction. Because they're a charge card, they make their money off the transaction fees, and not off the interest rates a card accrues. Conversely, this means they have to charge more on the front-end to maintain profitability.

They also offer credit cards. They differ from VISA and Mastercard in that they underwrite many of the lines of credit themselves (they make about $5 billion per year on interest).

Re: How Bad Will It Get for American Express?

#20

Post by jsprogrammer » Fri, Oct 16, 2015, 4:12 PM UTC

Sanddancer wrote: post #13

magic_beans wrote: post #8

Earlier quoted context omitted.

I've live in New York and I've literally never been to a single bar or grocery store that accepts American Express. Anyone know why this is?

Amex charges higher fees per-transaction. Because they're a charge card, they make their money off the transaction fees, and not off the interest rates a card accrues. Conversely, this means they have to charge more on the front-end to maintain profitability.

Most AMEX cards are credit.