AMEX not accepted or surcharge

[Moopere]

I can never understand the fact that so many places would reject making a sale because it is Amex. Sure it might cost them a little more in charges but they still make a sale which equals profit. Isn't a very slightly smaller profit better than none.

Yep, but I reckon in many cases its not a logical business decision - its an emotional one made by the owner of the business. Somehow they have managed to get themselves upset during negotiation of the card rate and are just trying to tell Amex to get stuffed without calming down for a moment and thinking about it from a pure cashflow perspective.

Look at which businesses either don't accept Amex at all or surcharge ... its almost universally small (re: tiny) business who singles out Amex from other card types. They obviously realise that to survive they need to accept at least some cards, and presumbly swallow the 1-2% cost of Visa/MC though my guess is that they choke on that as it goes down. With Amex charging even just a tiny bit more its the emotional breaking point for some of these guys.

Alas, a lot of these types of businesses will eventiually fail, as refusing Amex is just a symptom of the greater lack of understanding that the owners have for revenue and cashflow and how it all ties together to make their business solvent. Refusing Amex alone is unlikely to drive them broke of course, but as I say, it shows a probable lack of basic business understanding.

 

[Jama]

It is also big business. Case in point NRMA. And they are not alone. So NRMA forgo my insurance business totalling approx $2000, because they want to force me to pay the way it suits them, not they way it suits me, the customer. The fees are insignificant compared to losing that business completely.

And there is probably some brain dead decision maker at the top who thinks they did a good thing saving the organisation some Amex fees, whilst losing $2000 to a competitor. Pretty smart ! What if there is just 100 people who refuse to be forced to conform, thats a lot of money.

 

[Moopere]

It is also big business. Case in point NRMA. And they are not alone. So NRMA forgo my insurance business totalling approx $2000, because they want to force me to pay the way it suits them, not they way it suits me, the customer. The fees are insignificant compared to losing that business completely.

Yep, certainly. There are some examples of big business who fall into this petty minded trap. Relatively speaking though, they are fewer in number. I generally find most chain stores and larger-than-family-run business either accepts with no problem or accepts with surcharge but also surcharges other cards at the same rate.

Government agencies, being monopolies also seem to be very happy to only accept Visa/MC.

Many businesses, like insurance companies, have an over inflated sense of their value add to customers too. They don't seem to (yet) understand that they are selling a commodity. Wait until Woolies starts reselling insurance, that will be a rude awakening to many Where a product is easily sourced and there is little real difference in quality or functionality, price point and convenience (ie, payment methods for example) are king.

 

[RB]

They don't seem to (yet) understand that they are selling a commodity. Wait until Woolies starts reselling insurance, that will be a rude awakening to many Where a product is easily sourced and there is little real difference in quality or functionality, price point and convenience (ie, payment methods for example) are king.

Unfortuntely there are many people out there who adopt these thoughts of yours but do not have the ability or take the time to interpret the wording of the policies. Unfortunately the perceived "little" differences in quality or functionality are seen to be much bigger when a claim is knocked back because it is outside the policy wording.eg cut price comprehensive car insurance policies are cheaper but can have more exclusions and lower policy limits.
Maybe my work history makes me different but I am not going to buy insurance because a company takes a particular credit card

 

[Jama]

That was only an example. The post didn't have any bearing on quality of cover or choosing insurance based on payment options. When it comes policy terms I am fanatical about getting the best cover.

 

[Moopere]

Maybe my work history makes me different but I am not going to buy insurance because a company takes a particular credit card

Oh sure. Where ones own personal circumstances dictate a single specific insurer then you are facing a monoploy against your requirements. If they ask you for sheckles instead of plastic then this is what you must provide.

Likewise there are differences between A2 milk and unclassified milk, different potato's and egg varieties ... nevertheless, these items are still commodities for most people. More power to those small (or large) businesses which can demonstrate to their customers the real-world value of the "value add" they are providing - for those few who are successful at this, accepting cash only as payment may indeed be a viable option for them.

I think its probable though that these examples, including only having one insurance option, are likely to be corner case examples. Mostly, there are myriad acceptable choices ... how does one choose which to actually buy? Lots of reasons of course, but for people chasing FF points one important reason will be ease of payment and return on investment by way of points. Businesses not wanting these customers are free to do as they choose, but I think, financially speaking, its not the best option.

 

[JohnK]

I can never understand the fact that so many places would reject making a sale because it is Amex. Sure it might cost them a little more in charges but they still make a sale which equals profit. Isn't a very slightly smaller profit better than none.

Yes I never understood either. I know it varies with the type of product but assuming you buy something costing $100 and $30 of that is profit then by accepting Visa/Mastercard the cost to the business is ~70c or by accepting Amex the cost to the business is ~$1.99. Now if a business cannot absorb that cost or at least increase theprice of goods to cover that cost then there is something seriously wrong with their business model.

If the don't accept my preffered option of payment as the customer, without additional charges, I just move on and give someone else a sale. I just can't imagine buying something really big with a huge margin only to have them watch you walk out the door because the don't like your Amex.

They obviously believe that the buyer is just going to pull out another card. But that is not quite right. Most of the time I just walk out. If I am desperate then I will use another form of payment.

 

[wxxnxs]

Maybe my work history makes me different but I am not going to buy insurance because a company takes a particular credit card

This should be the way when we do the shopping, always choose the product which is the most suitable for you not based on other factors. If a supplier can offer me 15% discount by paying cash compare to 0% discount paying by AMEX, then I will cerntainly choose the cash method, why should I pay 15% extra to get those points which are only worth $5?

 

[JohnK]

I don't think anyone said one should pay more to use a credit card.

One perfect example is chemists.

There are a couple of chemists near where I work that accept Amex without surcharge. The maximum cost for PBS prescriptions is $34.20 and that is where I normally buy them plus they are also cheaper on price for most goods anyway. Occasionally another chemist may be closer when I need something but if they do not accept Amex then I am not going to purchase from there unless it is life threatening as I do not have any cash and I am not going to use Eftpos.

It actually makes some sense to plan things out and use Amex credit card where there is neglible cost difference.

 

[Flashback]

I don't think anyone said one should pay more to use a credit card. One perfect example is chemists. There are a couple of chemists near where I work that accept Amex without surcharge. The maximum cost for PBS prescriptions is $34.20 and that is where I normally buy them plus they are also cheaper on price for most goods anyway. Occasionally another chemist may be closer when I need something but if they do not accept Amex then I am not going to purchase from there unless it is life threatening as I do not have any cash and I am not going to use Eftpos. It actually makes some sense to plan things out and use Amex credit card where there is neglible cost difference.

That's one thing I love about the UK. I used to pay ~$33/month for my prescription. 3 months? Around $100. Over here, I get 3 months filled (the price is the same as 1, if you can manage to get the Dr to give you a 3 month supply) for 7.40 GBP. Bargain!

 

[Moopere]

This should be the way when we do the shopping, always choose the product which is the most suitable for you not based on other factors. If a supplier can offer me 15% discount by paying cash compare to 0% discount paying by AMEX, then I will cerntainly choose the cash method, why should I pay 15% extra to get those points which are only worth $5?

Yes, but in the context of this thread, what would you do if:

- Shop A offered a dozen "TastyDoh" donuts at $10 and only accepted cash
- Shop B offered a dozen "TastyDoh" donuts at $10 and accepted cash, VISA/MC, Amex?

If one is chasing FF points would it be reasonably smart to choose shop B?

Further to the thread, wouldn't the owner of shop B be pretty pleased that he just made a sale, increased revenue and probably profit too? If we assume both shops have equal input costs, and further assume that no-one is selling below cost, who has made the most money?

 

[Flashback]

Yes, but in the context of this thread, what would you do if:

- Shop A offered a dozen "TastyDoh" donuts at $10 and only accepted cash
- Shop B offered a dozen "TastyDoh" donuts at $10 and accepted cash, VISA/MC, Amex?

If one is chasing FF points would it be reasonably smart to choose shop B?

Further to the thread, wouldn't the owner of shop B be pretty pleased that he just made a sale, increased revenue and probably profit too? If we assume both shops have equal input costs, and further assume that no-one is selling below cost, who has made the most money?

It's hard to say because while you can quantify the cost of the sale of the CC transaction, the cash one you cannot as time spent handling/banking etc. would be evened out to (most likely) a lower overall cost than what the c/c % would be.

 

[Moopere]

It's hard to say because while you can quantify the cost of the sale of the CC transaction, the cash one you cannot as time spent handling/banking etc. would be evened out to (most likely) a lower overall cost than what the c/c % would be.

True enough - though cash handling of more than a pocketful of notes can work out quite expensive. Known cash handlers have very real security issues as well as transfer and carrying costs.

However, I was being cheeky and the question was purposely tricky ... Shop A lost the sale to shop B, therefore Shop A made nothing.... its simplistic I know, and assumes all other things are equal - but, for most business, they don't have a market monopoly and need to remain aware of this.

 

[sparoz]

Current offer is 1.49%.....

Sensational rate! They always look after the Drs!

Me thinks we should go back to our favorite coffee shops, but this time take along a nice BIG bag of 5 cent pieces...based on you average spend there of $100 per week, this works out to $20 per day (or 400 coins @ 5 cents each) At the end of the week they will have a nice hefty cache of around 2,000 5 cent pieces to count and get rid of... This will make them mad for sure, at this stage I would remind them that you would normally save the hassle and pay with amex, but since they clearly prefer cash then so be it...!

After all, the lonely 5 cent piece is still legal tender and must be accepted for payment of goods. After the above game, they might actually see that cash also costs them profit and if it is as we all expect, cash turns out to be more expensive than credit cards such as Amex. You never know, some may actually change their opinion of credit card costs...

Just my 5 cents worth

Can't remember the limit, but it is only a legal tender up to a certain amount. .

Yes, but in the context of this thread, what would you do if:

- Shop A offered a dozen "TastyDoh" donuts at $10 and only accepted cash
- Shop B offered a dozen "TastyDoh" donuts at $10 and accepted cash, VISA/MC, Amex?

If one is chasing FF points would it be reasonably smart to choose shop B?

Further to the thread, wouldn't the owner of shop B be pretty pleased that he just made a sale, increased revenue and probably profit too? If we assume both shops have equal input costs, and further assume that no-one is selling below cost, who has made the most money?

Provided your assumptions are correct, and there is still profit being made after the amex surcharge. However, this is very simplistic, and every business circumstances will be different. For example, I would not go to my car dealer and push them to the limit with their discount and get them to accept amex without surcharge . In my industry, AMEX cost about 2% more than visa/mc, and I will need to lose 1 in 50 customers before I would be worst off. However, I also don't know how many people is coming to me because I accept the card at no fee . With Amex only account for 2% of all payment anyway, it is a no brainer to accept the card at no surcharge.

What I am disappointed is with hotel groups who charge fees for all cards (how else am I going to pay?), and up market restaurants not accepting Amex. But what can you do if the business have some market power? Like the butcher and the fruit and veg shop I go to don't accept Amex, but their stuff is much better than anywhere else in town.

 

[wxxnxs]

Yes, but in the context of this thread, what would you do if:

- Shop A offered a dozen "TastyDoh" donuts at $10 and only accepted cash
- Shop B offered a dozen "TastyDoh" donuts at $10 and accepted cash, VISA/MC, Amex?

If one is chasing FF points would it be reasonably smart to choose shop B?

Further to the thread, wouldn't the owner of shop B be pretty pleased that he just made a sale, increased revenue and probably profit too? If we assume both shops have equal input costs, and further assume that no-one is selling below cost, who has made the most money?

OK, I did not make clear at the beginning. Basicly, I would prefer merchants accepting credit card without any surcharges, if shop A & shop B both charge the same price and one accepts the card but another does not, I certainly will choose A for sure. However, if they do offer difference between cash & card payment method, then that's another story.

 

[sparoz]

It's hard to say because while you can quantify the cost of the sale of the CC transaction, the cash one you cannot as time spent handling/banking etc. would be evened out to (most likely) a lower overall cost than what the c/c % would be.

Just done some rough sum, and cash handling cost is in the vicinity of 0.2% for my business.

 

[Flashback]

Just done some rough sum, and cash handling cost is in the vicinity of 0.2% for my business.

That sounds about what I'd expect it to be.

 

[sparoz]

I don't think anyone said one should pay more to use a credit card.

One perfect example is chemists.

There are a couple of chemists near where I work that accept Amex without surcharge. The maximum cost for PBS prescriptions is $34.20 and that is where I normally buy them plus they are also cheaper on price for most goods anyway. Occasionally another chemist may be closer when I need something but if they do not accept Amex then I am not going to purchase from there unless it is life threatening as I do not have any cash and I am not going to use Eftpos.

It actually makes some sense to plan things out and use Amex credit card where there is neglible cost difference.

No reason why pharmacies don't accept AMEX. Although the margin is low, most medicines are subsidised, and the payment only represents a fraction of the actual sell price, making the effective cost to the business easily absorbed.

 

[Moopere]

Just done some rough sum, and cash handling cost is in the vicinity of 0.2% for my business.

0.2% of no sale is still $0

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No one can argue that lower costs are not better for your business and bottom line, but at what point to we stop doing that and keep concentrating on playing the game hard against our competition and giving our customers every reason to open their wallets in _our_ establishments?

I believe I saw a figure stated recently that every 1% of market share that moves between the two giants of food logistics, Coles and Woolies, is worth about 700M$ a year .. or something in that region. Whilst these are two obviously huge players in their market, its easy to believe that not accepting a certain common method of payment could very well easily cost them several % points of market.

 

[Moopere]

With Amex only account for 2% of all payment anyway, it is a no brainer to accept the card at no surcharge

Yes I agree.

I tell you what, if I could gain 2% more business as easily as simply accepting a small surcharge at the backend I'd jump at the chance so fast the Amex guy wouldn't know what happened.