Regarding the visa commercials.
Some stores don’t take american express. Why not? Isn’t it in their interest to do so. Does visa pay companies to not take American Express. If so, did the companies used to take AE and decide not to in favor of cash from visa, or did they never take AE. If not, why not?
A few reasons not to take American Express:
Amex charges the vendors a higher percentage, 2.6% to 2.8% of the charge total as opposed to about 1.5% to 1.75% that the other major cards charge (IIRC)
Amex deducts these fees on a daily basis, rather than a monthly basis. All other major cards take a monthly fee at the end of the month, allowing you to retain the fees and earn interest on them for a bit longer.
3.You have to handle the Amex accounting different than astercard, Visa, and Discover, requiring more time spent by your financial department on a daily & monthly basis.
A store that accepts American Express gets financially hit three different ways. And, if you are a large corporation, they try and make you use their horrible, sucky software to download your fees and chargebacks on a daily basis. Amex is a big pain in the butt, no matter how you slice it.
American Express charges store owners a fee per transaction that is significantly then the other credit card companies.
In the OLD days- pre Optima, etc- Amex cards HAD to be paid in full at the end of the month. The vendor had a guarantee of payment, and Amex had guarantee of NOT waiting and floating a loan at 22% interest.
For the priveledge, they charge 7% of the sale. That’s right, 7%. ( Or, they did a few years ago when I almost became a vendor who accepted Amex for my service as a Camera Operator…
).
I’m guaranteed the money, and Amex keeps my 7%. I don’t know what it is with Visa, they may charge some too but not as much. Since Amex- in the old days, again- didn’t get to charge YOU the consumer 22% interest, they had to make their money on the front end, from the store. Now, Ms. Store Owner isn’t going to take a hit for 7%, they simply jack their prices accordingly.
I have no idea if Visa pays companies NOT to accept Amex. My WAG here is that they chose NOT to do so, to save the 7% and not have to raise their prices to cover that surcharge.
I chose not to become an Amex person. It sounded cool initially, but asking a Producer in the field to whip out her Company Amex card and pay my invoice ON THE SPOT just felt sooooooo…unprofessional. I’m not the caterer, I’m the Steadicam Operator. I should be able to wait to get paid. :0
Cartooniverse
I heard that the DoJ was investigating Visa and Mastercard for antitrust violations, and driving up interest rates by driving out competitors like Discover, Optima/Amex, etc. and putting the squeeze on banks, vendors, and consumers. Must be nice to have a business where you can squeeze some money out of everyone involved in the transactions. The credit companies look like public enemy #2 right behind BillG, if you ask me. Sic em, DoJ Antitrust unit!
Amex charges higher per transaction fees. A merchant operating on the margins may not find the additional business worth the expense … because … the accounting is handled differently - You need a separate merchant number, and must pay a merchant maintenance fee. From a merchant’s point of view, Visa and Mastercard are the same thing - one merchant account, one set of smaller fees, a much larger customer base. It’s easy.
A lot of the e-commerce businesses my company handles prefer to limit their business to VA/MC because the added cost and hassle are not worth it. You know what? They’ve been proven correct. Even the companies we host that accept Amex and Discover rarely, if ever, see purchases with these cards. When was the last time you saw someone whip out an Amex card in line at a store? And have you ever known anyone who had an Amex who didn’t have a VA/MC as well?
There was an article about exactly this topic in the WSJ a while back. It has nothing to do with extra charges. Basically, Visa just pays certain businesses not to accept American Express. (I’m not sure they even did this; they may have just given them free publicity through the ads.) There was some sort of minimum time limit (like a year), but after that many of the places went right back to accepting AmEx again, even when Visa was still running ads saying they didn’t!
“I heard that the DoJ was investigating Visa and Mastercard for antitrust violations, and driving up
interest rates by driving out competitors like Discover, Optima/Amex, etc”
Oh, really? Yesterday I was doing a long distance call from the payphone at the airport & the operator said they don’t take Visa, only Discovery or Amex. Shucks, that really sucked.
Hijack:
Damn straight! Not long ago Visa suddenly got all ruthless on us. They used to have a grace period, like most monthly payment plans, and their lates fees were moderate. Now If you’re just one day late on a $20 minimum payment, they sock you with a late fee of $29! Furthermore, my due date used to be around the 15th, or as late as the 18th of the month. I was accustomed to mailing my payment after getting paid on the 15th and counting on the grace period as needed. Now they’ve sneakily bumped the due date up to the 12th or 11th just to try to trip you up (my account’s thru Citibank, BTW). A pretty blatant and heavy-handed grap for the consumer’s money.