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How Bad Will It Get for American Express?

bloomberg.com

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Re: How Bad Will It Get for American Express?

#21

Post by adamgray »

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…

It seems like a hit piece from Bloomberg - someone must want AmEx's stock to drop this week.

Re: How Bad Will It Get for American Express?

#22

Post by brewdad »

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.

Not really. Before AMEX, Costco had an exclusive deal with Discover. That's the definition of inconvenience. This new deal will result in a Costco branded Visa but Costco will be accepting ANY Visa card. For the vast majority of consumers this is much more convenient.

FWIW, AMEX has been doing the hard sell trying to get me to switch to a new card. So far, I haven't seen any offers worth my time. It's a shame really. I've been a cardholder for 15 years and even worked for them for a few years. Personally, I see no reason to continue the "relationship".

Re: How Bad Will It Get for American Express?

#23

Post by ajross »

crisopolis wrote: post #15

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.

Yeah, but I'm in the demographic being discussed in the article: I'm an AMEX cardholder for the sole purpose of being able to shop at Costco. The AMEX doesn't otherwise come out of my pocket, for the simple reason that there are places that won't take it and I'm too lazy to turn around and look for the sticker on the door. When the Costco contract drops, I'm almost certainly going to cancel the account.

Re: How Bad Will It Get for American Express?

#24

Post by AngrySkillzz »

zyxley wrote: post #14
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?

2.5% transaction fees instead of 2%. The average grocery store has a profit margin of 1% to 3%, from what I understand.

Yeah, it's as simple as that. When their product that is 25% more expensive than competitors and less useful (accepted at less retailers), they deserve to get knocked off their pedestal. No one cares about the Amex brand. They are a commodity provider in the payment market.

Re: How Bad Will It Get for American Express?

#25

Post by zyxley »

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?)

The AmEx brand is—or, at least, originally was—aimed at people who don't care about the cash or discount rewards most other cards offer, and would rather have massages in airports, on-call concierges, personal shoppers, and so on.

Just getting the mystical Centurion Card (aka the "Black" Card) requires being personally invited by the company after spending at least $21,000 a month on AmEx cards. They have no credit limit at all, and some people have made multimillion-dollar purchases using them.

Re: How Bad Will It Get for American Express?

#26

Post by roymurdock »

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?)

It's about consumers and merchants knowing they can trust the brand of the card to be a) accepted everywhere to reduce the complexity of managing multiple credit card accounts and b) fraud-protected so they know they won't have to pick up the tab for losing/having a card stolen.

Having customers view the Visa/Mastercard/Amex "brand" (aka network) in this light is very valuable.

Perks such as cash back, no foreign transaction fees, and miles/points are nice, but they're pretty standard across the different credit tiers of all the major cc providers.

Perhaps having an Amex was once considered prestigious, but speaking for myself and my friends in the mid 20's, credit card providers/payment networks are perceived as largely homogeneous. Nobody cares if you're throwing down an Amex or a Visa to split the Korean BBQ bill. If anything, you'll get a comment of "when are you switching off Amex, their network coverage sucks in Europe".

Re: How Bad Will It Get for American Express?

#27

Post by johnnyb9 »

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?

I live in Manhattan and my experience has been that every bar accepts Amex.

Re: How Bad Will It Get for American Express?

#28

Post by zyxley »

nlawalker wrote: post #17
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.

It seems to me like the company is caught between a rock and a hard place: the only way to make the card popularly accepted enough that the high-end "status" cardholders can use it anywhere they like is to dilute the brand by convincing as many people as possible to use it.

Re: How Bad Will It Get for American Express?

#30

Post by thieving_magpie »

crisopolis wrote: post #15

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.

Really? I only have an AMEX card and unless it's a chain store it's almost never accepted. I often get lectures from small business owners about the higher rates charged by AMEX and why they can't accept it.
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