AMEX not accepted or surcharge

[ChrisFlyer]

Re: AMEX not accepted or surchage

Why do businesses think it is OK to continually increase surcharges on credit cards. This has nothing to do with cost recovery but simply a cash grab. Although a 1% fee sounds a lot better than a flat charge, ala Qantas, Virgin, Jetstar, Tiger etc....

I'm quite sick of surcharges, and with Australia being one of the only countries in the world where credit card surcharging is legal in every state (thanks to the Reserve Bank), it means that businesses which run on a national scale are more likely to consider surcharges, as opposed to if it were only legal in certain states or cities. But the four main things that I wish businesses would keep in mind when considering surcharging are:

1) While electronic transactions do have fees, it also costs money to accept cash (counting, handling, banking, untrustworthy employees, employees accidentally giving too much change, and even more costs if robbed - not just the cash itself, but staff time and loss of business from a temporary store closure).

2) If a higher-than-usual percentage of credit card fraud is occurring at your business (and you're considering surcharging as a result), consider training staff to actually check the authenticity of the cards that are being accepted (ie. check the numbers on the card, sig. panel and receipt all match; that the signature reasonably resembles what's on the card; that the card hasn't been tampered with or is a fake card (no hologram or if it doesn't "move" as it's supposed to)), etc... It only takes 5/6 seconds to check all of this...

3) That, for larger businesses, due to your business size you are most likely in a position to negotiate a better rate for credit cards, as your aquirer (and also Amex) will (in *most* cases) rather keep you as a customer at a lower rate, than lose your business altogether

4) That there are most likely other businesses who sell your product, or who sell similar products (without surcharge), that the savvy credit card user will frequent instead of your business (ie. Tarocash clothing can be bought from Myer/DJs without surcharge, yet the actual Tarocash stores choose to surcharge, and have lost my business as a result)

... Lol I would like to say that to every business who surcharges, but don't have the energy to say it to every single one... haha! And also, while I remember about Tarocash - here is the reply I received from their CEO Re: surcharge:

Hi Chris

Thank you for your feedback. The decision to charge 2% was a hard one, but it was this or not accepting AXEX at all. It has become common practice in New South Wales to have a surcharge for using American Express (including upmarket restaurants) and some retailers (Ikea, Godfreys to name a few) do not accept AMEX at all.

While we do value your custom and are very disappointed you feel this way, there is no way I can change this surcharge for individuals (our system does not allow this). I am monitoring this situation carefully and your email is the first negative feedback I have received. Most of our customers understand and accept the logic behind the decision – the 2% is the difference between what MasterCard and Visa charge.

While I do respect your decision, I hope our great product and exceptional customer service will entice you back into our stores.

I have a meeting scheduled with American Express to discuss merchant fees and if American Express reduce their fees, I will reduce our surcharge and notify you.

Kind regards

Gary

If anyone wants the email address to complain to, I'm happy to forward it to your PM inbox, but won't post it here at risk of spam

 

[lovestotravel]

Re: AMEX not accepted or surchage

In most small businesses the owners are usually working somewhere and I casually ask who the owner is and most of the time I am already speaking to them.

They give me the usual speal about the higher merchant fees etc etc and that people will not walk from a shop because they do not accept Amex.

I tell them firstly that Amex will usually get the merchant fee down to 1.9% if you ask them nicely and then I politely leave and say I'll come back once I see American Express stickers/signs on your counter or registers.

I then report them on the Amex website.

From the hundreds of reports I have submitted two shops now accept Amex, both butchers which is good!

I support my local butcher now twice a week by shopping there and paying with Amex.

No min spend either as they appreciate having less cash to count each day. Credit cards are easier and the money is in the bank in 2 working days!

Amex can afford to lower their merchant fees now and they will have to, to keep signing new shops onto accepting their cards.

Amex used to only really have the mercant fee to gain income, but now with an ever expanding credit card base, instead of charge cards only, they can earn some nice interest from customers who don't pay off their cards in full each month. At 20% or whatever they are charging for interest nowdays they must be making LOTS of $$$

 

[ChrisFlyer]

Re: AMEX not accepted or surchage

I support my local butcher now twice a week by shopping there and paying with Amex.

That's great - clearly their management were smart enough to realise that although Amex transactions have a higher expense than Visa/MC, their acceptance of the card also increases their revenue from customers such as yourself - meaning a better bottom-line as a result

In this economy, you'd think a lot more small businesses would consider this to increase their bottom line (and also provide better customer service).

 

[lovestotravel]

Re: AMEX not accepted or surchage

That's great - clearly their management were smart enough to realise that although Amex transactions have a higher expense than Visa/MC, their acceptance of the card also increases their revenue from customers such as yourself - meaning a better bottom-line as a result

In this economy, you'd think a lot more small businesses would consider this to increase their bottom line (and also provide better customer service).

Yes & yes!

Amex will come pretty close to VI/MC rates, usually around 1.1% for VI/MC and 1.9% for Amex.

Not much in the scheme of things and Amex generally does provide higher spend customers.

 

[ChrisFlyer]

Re: AMEX not accepted or surchage

Amex will come pretty close to VI/MC rates

Very true - when I personally accept the card, I only pay 0.5% more for Amex (and Diners also matched their rate )

 

[JohnK]

Re: AMEX not accepted or surchage

3) That, for larger businesses, due to your business size you are most likely in a position to negotiate a better rate for credit cards, as your aquirer (and also Amex) will (in *most* cases) rather keep you as a customer at a lower rate, than lose your business altogether

I work for an insurance company that does not accept Amex only Visa/Mastercard and direct debit from bank account.

We had a meeting on an outstanding issue last week and I asked one of the senior staff why we do not accept Amex. High merchant fee quoted a number of years ago. So I asked how much? They would not tell me other than to say that accounts decided that it was not feasible to accept Amex. No effort made since to contact Amex.

I left a thought on their mind that if they tried hard enough, considering the size of the business, they could get the Amex merchant fee down to 1.99% or more than likely 0.99%. I also mentioned that NRMA, Suncorp and most insurance companies accept Amex and many people make decisions on where to shop based on card acceptance.

I don't know about other people but I refuse to have direct debit attached to a bank account and will only use Visa/Mastercard in an emergency.

 

[lovestotravel]

Re: AMEX not accepted or surchage

High merchant fee quoted a number of years ago. So I asked how much? They would not tell me other than to say that accounts decided that it was not feasible to accept Amex.

I also mentioned that NRMA, Suncorp and most insurance companies accept Amex and many people make decisions on where to shop based on card acceptance.

I don't know about other people but I refuse to have direct debit attached to a bank account and will only use Visa/Mastercard in an emergency.

All VERY good points

1. Many companies are going back to many years ago when Amex was always around 3-4% for their merchant fee. Again before Amex had credit cards and interest on outstanding amounts to make $ from

2. Yes some people will decide where to shop/purchase based on card acceptance.

3. I would NEVER have a direct debit attached to my bank account, but more than happy to have direct debit with my Amex

 

[zzyss]

Re: AMEX not accepted or surchage

The only thing I'm worried about if you guys succeed, is that the dividing line won't be V/M vs. A but regular cards vs. Plat / Corporate cards

I really don't get why these cards charge merchants higher rates. It's a very odd situation that credit card companies have created tiers of product where the penalty is on the merchant... taken in any other context it would be blatantly unethical!

 

[NM]

Re: AMEX not accepted or surchage

The only thing I'm worried about if you guys succeed, is that the dividing line won't be V/M vs. A but regular cards vs. Plat / Corporate cards

I really don't get why these cards charge merchants higher rates. It's a very odd situation that credit card companies have created tiers of product where the penalty is on the merchant... taken in any other context it would be blatantly unethical!

And how do the ethics stand up when a CC company provides a "free" upgrade to all their Gold card members to a Platinum card? Suddenly the CC provider is earning premium merchant fees from much greater number of members.

 

[ChrisFlyer]

Re: AMEX not accepted or surchage

And how do the ethics stand up when a CC company provides a "free" upgrade to all their Gold card members to a Platinum card? Suddenly the CC provider is earning premium merchant fees from much greater number of members.

Not too sure how to comment on that one - but remember that platinum accounts usually have other benefits to the customer, such as high rewards earn rates, concierge services, complimentary insurances etc... So it's not just that the CC company is getting more in merchant fees, but is also offering more to the customer using the card.

Either way, the fee for accepting a platinum Visa/MC will in most cases still be lower than what a business would pay for Amex or Diners, although this may not always be the case (ie. if the business either has a very competitive Amex fee, is being over-charged by their acquirer for Platinum/Corporate MC/Visa, or pays the same rate for all types of Visa/MC cards). On the other hand, the merchant always pays the same fee for any Australian Amex or Diners card, regardless of rewards, platinum, corporate etc. I can't remember whether or not Amex or Diners charge more to accept an overseas card though (I know I personally don't pay extra to accept overseas Amex or Diners, but do pay an extra 1.1% for overseas Visa/MC cards... making them more expensive than Amex! Having said this, it costs me no extra for Australian Platinum or Corporate Visa/MC cards though).

 

[zzyss]

Re: AMEX not accepted or surchage

Not too sure how to comment on that one - but remember that platinum accounts usually have other benefits to the customer, such as high rewards earn rates, concierge services, complimentary insurances etc... So it's not just that the CC company is getting more in merchant fees, but is also offering more to the customer using the card.

I think the point here is that it comes at the expense of the merchant. Say I were Amex, and I decided to release a new "ultra-platinum" card which delivered 6 reward points per dollar - and it was wildly successful in these economic times. Would they have consulted merchants prior to doing so, or just added a line item to their rate card for ultra-platinum (say, at 6%)? The onus is then on merchants to choose whether to accept these cards or not, but if 3 out of every 10 customers walks in with one of these, you'd have a tough decision on your hands.

(Which I guess is also the same argument for Amex vs. V/M really... what proportion of cardholders walking into a business have A vs. V/M, and how much do they stand to lose by not accepting it).

 

[straitman]

Re: AMEX not accepted or surchage

I think the point here is that it comes at the expense of the merchant. Say I were Amex, and I decided to release a new "ultra-platinum" card which delivered 6 reward points per dollar - and it was wildly successful in these economic times. Would they have consulted merchants prior to doing so, or just added a line item to their rate card for ultra-platinum (say, at 6%)? The onus is then on merchants to choose whether to accept these cards or not, but if 3 out of every 10 customers walks in with one of these, you'd have a tough decision on your hands.

(Which I guess is also the same argument for Amex vs. V/M really... what proportion of cardholders walking into a business have A vs. V/M, and how much do they stand to lose by not accepting it).

I agree but remember that part of the difference will still be made up by the "ultra-platinum" card costing much more to get in the first instance.

 

[pointsjunkie]

Re: AMEX not accepted or surchage

ChrisCh, you raise so many good points!

Why do businesses continue to think they can surcharge their customers, blame AMEX for their fees and think that we'll just accept that an justification?? They are so stupid if they think it's not having a negative impact on their business. Yes, we may buy that product on that one occasion as we have no choice but I can tell you, I'll never be back to that surcharging store again. How can they think it's ok to turn away any possible customer by penalising them using the payment method of choice, especially in these tough economic times - they should be doing everything they can to attract customers and keep them happy!

All I can say to Gary, CEO of Tarocash, is you're the one who's suffering by surcharging AMEX because there are so many other brands out there we can all go to - it's an extremely short-sighted view, you'd think business owners would have more sense than that! He says that lots of businesses surcharge but I find it less and less, I can use my AMEX wherever I want now. Yeh sur,e there are a few places that surcharge, but that's very minor, and I just don't go there - many other competitors to choose from!

To be honest, I would rather a business just not accept AMEX rather than surcharge and make money from it - it's such a bad experience as a customer being told that at the register!

 

[Dave Noble]

Re: AMEX not accepted or surchage

Why do businesses continue to think they can surcharge their customers, blame AMEX for their fees and think that we'll just accept that an justification?? They are so stupid if they think it's not having a negative impact on their business. Yes, we may buy that product on that one occasion as we have no choice but I can tell you, I'll never be back to that surcharging store again. How can they think it's ok to turn away any possible customer by penalising them using the payment method of choice, especially in these tough economic times - they should be doing everything they can to attract customers and keep them happy!

You are not forced to pay using an American Express card, there are other options. AMEX *do* charge fees so seems a reasonble justification for the fee as long as it reflects the additional costs of taking an overpriced card

Dave

 

[NM]

Re: AMEX not accepted or surchage

I agree but remember that part of the difference will still be made up by the "ultra-platinum" card costing much more to get in the first instance.

But in the example I provided, many of the Gold card holders had signed up for the fee-free for life Gold card. They choose the case because it had no fees ... for life. So when the CC provided "upgraded" them to Platinum, they continue to be free.

Yes, the card member receives the benefits of Platinum, but its the merchant that is now funding these additional benefits by being charged the "premium" card merchant fee rather than the regular Gold card merchant fee.

 

[pointsjunkie]

Re: AMEX not accepted or surchage

You are not forced to pay using an American Express card, there are other options. AMEX *do* charge fees so seems a reasonble justification for the fee as long as it reflects the additional costs of taking an overpriced card

Dave

Hi Dave, that's my exact point! I'm not "forced" to pay with my AMEX, but I want to pay with my AMEX. Of course there are other "options"... just like there are many other "options" of places for me to spend my money. So, if my choice, as a customer is to pay with my AMEX, then I'm not going to change that to accommodate a merchant that wishes to surcharge. Rather I'll exercise my "options" as a consumer and choose to shop somewhere else! The merchant has every right to surcharge, as it's legal, my point is that if they do, they're losing all of my business from that point on cause there's competitors out there who I can go to where they'll happily let me pay how I'd like to.

 

[Dave Noble]

Re: AMEX not accepted or surchage

AMEX cardmembers spend more money, so we want to keep these customers

And how many of these only have amex?

 

[Dave Noble]

Re: AMEX not accepted or surchage

Hi Dave, that's my exact point! I'm not "forced" to pay with my AMEX, but I want to pay with my AMEX.

But why should the retailer pay for your desire to do so? If you want to use a more expensive method of payment , why shouldn't you pay the extra?

 

[pointsjunkie]

Re: AMEX not accepted or surchage

And how many of these only have amex?

I don't have access to that data. I can only base it on my personal experience which is... I have an AMEX and yes, I have a Visa as well. However, my AMEX is my preferred method of payment and I only have the Visa for the odd emergency, I'd be lucky to put $200 a month on it. I also know that I spend more when I am somewhere that accepts AMEX, yet if I go into a shop that doesn't take AMEX, I'll only buy the bare necessities and never go back. Sounds crazy but if I like a dress but can't really afford it and the place doesn't accept AMEX, then I'll quickly put it back on the shelf. However, if they do accept AMEX, I always find a way of justifying that dress Same goes for any other purchase, I'm always more willing to spend if I can use my AMEX - one cause I get the points but also there's something horrible about being told I have to pay more for using a credit card, so I purposely don't want to give that business any of my money.

 

[pointsjunkie]

Re: AMEX not accepted or surchage

But why should the retailer pay for your desire to do so? If you want to use a more expensive method of payment , why shouldn't you pay the extra?

They don't. A retailers not forced to do anything. Just like I'm not forced to pay a cent extra just for wanting to pay with a piece of plastic of my choice. I don't give a toss what the retailer does, they can surcharge 30% as far as I'm concerned, all I'm saying is they won't see a cent of my business cause so many other businesses are happy to see me walk through their door and charge me the same price as everyone else, irrespective of payment method.