More Company REFUSE AMEX

[wxxnxs]

No doubt, AMEX is becoming less and less popular in this market. After NRMA totally refused AMEX, our company received another letter from CHUBB FIRE, and from 06 APR 2010, AMEX will not be accepted anymore for the payment!! What a shame for the AMEX!

We have got at least 10 suppliers stopped accepting AMEX since Jan this year. Well done AMEX, why not just quit from this market in order to save us a little bit time to ask: " Do you take AMEX?"

 

[yohy?!]

It is a shame about NRMA and Chubb, in the case of car insurance there are several other companies who also sell insurance and will accept Amex.

In the case of Chubb it seems a good opportunity to shop around for the services you need, I've found from my line of work (Property/Asset Management) that they are both expensive and inept in terms of service and billing.

There has been a lot of advertising by Amex highlighting that their acceptance has increased, I would think this likely due to people taking up bank-issued Amex cards and the fact they have begun looking at reducing their fees to become more competitive.

I've noticed the difference as I previously held a card about 5 years ago and only just rejoined this year.

 

[wxxnxs]

It is a shame about NRMA and Chubb, in the case of car insurance there are several other companies who also sell insurance and will accept Amex.

In the case of Chubb it seems a good opportunity to shop around for the services you need, I've found from my line of work (Property/Asset Management) that they are both expensive and inept in terms of service and billing.

There has been a lot of advertising by Amex highlighting that their acceptance has increased, I would think this likely due to people taking up bank-issued Amex cards and the fact they have begun looking at reducing their fees to become more competitive.

I've noticed the difference as I previously held a card about 5 years ago and only just rejoined this year.

Unfortunately, I am not the person who can decide to switch, that's up to the corporate management but I have already suggested them to get rid off NRMA & CHUBB because both of them are not competitive anymore. No matter AMEX advertised how many stores are inceasing to accept its card, however most of them do it with certain conditions, such as surcharge xx%.( I think that's really tricky, you either accept without conditions or reject it)

 

[drewbles]

Unfortunately, I am not the person who can decide to switch, that's up to the corporate management but I have already suggested them to get rid off NRMA & CHUBB because both of them are not competitive anymore. No matter AMEX advertised how many stores are inceasing to accept its card, however most of them do it with certain conditions, such as surcharge xx%.( I think that's really tricky, you either accept without conditions or reject it)

The laws changed several years ago to allow merchants accepting credit cards to recover fees, meaning they're allowed to (and as you know, do) charge a surcharge to supposedly recover their costs.

It's been shown that the fees they charge (with Cabcharge @ 10% being the worst) are often just money-grabbing charges that benefit them well and above the real cost of the transaction.

Until the Reserve Bank does something to crack down on it, there's not much we can do. Look at Hotels. Most in Australia now are introducing surcharges for *all* credit cards, this means Visa and MasterCard are now also not exempt from the rip off.

Vote with your feet if you're not happy, but if more places bring it in, you're stuck between a rock and a hard place.

 

[wxxnxs]

The laws changed several years ago to allow merchants accepting credit cards to recover fees, meaning they're allowed to (and as you know, do) charge a surcharge to supposedly recover their costs.

It's been shown that the fees they charge (with Cabcharge @ 10% being the worst) are often just money-grabbing charges that benefit them well and above the real cost of the transaction.

Until the Reserve Bank does something to crack down on it, there's not much we can do. Look at Hotels. Most in Australia now are introducing surcharges for *all* credit cards, this means Visa and MasterCard are now also not exempt from the rip off.

Vote with your feet if you're not happy, but if more places bring it in, you're stuck between a rock and a hard place.

I feel very awkward when I make the complaint here, because I work in the hotel and our hotel do charge guests cc fees, and unfortunately it seems the head office has no intention to remove the fee even all of our departments against that, but we do get charged higher fees on AMEX transactions, much higher than a lot of people quote the rate here.(Probably AMEX treats corporate & standard business differently)

Now I just found in Australia, the credit card is becoming a costy payment tool, worse than 7 years ago when I was in Brisbane.

 

[ChrisFlyer]

I've actually found that my Amex has never been more accepted than it is today... And now that Macca's accepts it (used it there for the first time last night), I only ever have to use my MasterCard to pay Qld car rego, and on PayPal until they iron-out their Amex settings.

I value the rewards from MasterCard spending at 3% of the purchase amount, and 6% of the purchase amount for Amex (... and sometimes that goes up to 7.5% if a promo is happening)... So while there are a couple of places that still surcharge Amex (JB Hi-Fi - 1.9%, Wow Sight & Sound & Tarocash 2% etc), it is still makes sense to pay the small surcharge, as the difference between rewards on the card types is 3%... So I can use MasterCard with no fee and get 3% back in rewards, or pay an extra 2% for Amex and get total rewards of 6% ... or if I'm really picky, I can just go to Clive Peeters, D!ck Smith, Tandy, dept. stores etc etc and pay no surcharge at all!

And having said that, most of the places that surcharge Amex also apply the same surcharge to Visa & MasterCard (but charge even more for Diners - eg Telstra & Vodafone etc), so you may as well use Amex and get the extra points!

My two cents anyway

 

[ric_melb]

We all have to deal with the surcharges that were made possible by the Reserve Bank.
However I find I am able to use my Amex at most merchants, without a surcharge.
And where they wish to surcharge, usually I can use Visa and Mastercard, without surcharge.
Whilst I hate surcharges I do not find use of a credit card to be that difficult.
Also bonus points add to points accrued on various cards.

 

[JohnK]

I am finding more and more smaller businesses that happily accept Amex without surcharge.

What is it with the greed of larger companies such as NRMA not accepting AMEX?

 

[wxxnxs]

I am finding more and more smaller businesses that happily accept Amex without surcharge.

What is it with the greed of larger companies such as NRMA not accepting AMEX?

I may think because they are too large and take too many business, which can let them do whatever to maximise their profit, because most of people won't mind using another card to pay. Just like our hotel chain, most people will still accept surcharge or use another method. Now since we launched surcharge for credit card, the % of cash and EFTPOS payment has increased significantly.

 

[yohy?!]

It would be interesting to compare after a year how the surcharging has affected your hotel's financial performance:

-Did the staff labour cost increase possibly due to more cash handling required
-Any instances of robbery or staff theft due to increased amounts of cash held onsite

-Did the average total bill per customer decrease, people on vacation love to spend on their plastic...
-Did spending on ancillaries like food/gifts/beauty treatments decrease?

-What was the 'true' saving the business made between processing bills by credit card or eftpos...

 

[albatross710]

I wish my SME computer system would make it easier to pass on the AMEX surcharge. As an indication of what that ~3% costs in terms of a share of the profit on a transaction:

If selling goods with a 20% margin, amex help themselves to 15% of the margin and yet they aren't doing 15% of the work just to process the payment, the same payment VISA & MCard can do 2 days faster for 0.6%

 

[wxxnxs]

It would be interesting to compare after a year how the surcharging has affected your hotel's financial performance:

-Did the staff labour cost increase possibly due to more cash handling required
-Any instances of robbery or staff theft due to increased amounts of cash held onsite

-Did the average total bill per customer decrease, people on vacation love to spend on their plastic...
-Did spending on ancillaries like food/gifts/beauty treatments decrease?

-What was the 'true' saving the business made between processing bills by credit card or eftpos...

To answer your question one by one:

1. The staff labor did not increase more than before, cash did not increase that much. Staff theft happens all the time, it seems unavoidable.

2. So far, the average total bill per customer has not decreased, actually it increases a lot, people do love to spend on their vocations on plastic, as well on ancillaries etc. (people seems don't care about the surcharge, probably they still get points on the surcharge amount)

3. The ture saving for the business is now guests pay parts of the processing fee, not as before company took all of that.

 

[trippin_the_rift]

I wish my SME computer system would make it easier to pass on the AMEX surcharge. As an indication of what that ~3% costs in terms of a share of the profit on a transaction:

If selling goods with a 20% margin, amex help themselves to 15% of the margin and yet they aren't doing 15% of the work just to process the payment, the same payment VISA & MCard can do 2 days faster for 0.6%

If you're being charged 15% by AMEX need to renegotiate your rate. Nobody with any brain power pays over 3% on their AMEX merchant.

3. The ture saving for the business is now guests pay parts of the processing fee, not as before company took all of that.

Parts of the processing fee? Try well above and beyond. This is nothing short of profit boosting by hotel management. Not that increasing revenue is a bad thing, but when you provide a high-margain, exclusive 5 star service - that couple % tacked onto the bill leaves a sour mouth in guests mouths. They will seldom tell you, but next time they are booking hotels yours won't be so high on their list.

 

[rwatts]

If you're being charged 15% by AMEX need to renegotiate your rate. Nobody with any brain power pays over 3% on their AMEX merchant.

I think you misunderstand albatross710's point. Consider a retailer selling a widget for $100 that they buy from the wholesaler for $80. Their margin is $20. If the Amex merchant fee is 3% of the sale price then if the retailer was to absorb that their nett margin is $17. $3 is 15% of that $20 margin.

Of course their merchant fee has not suddenly increased - the merchant traditionally made sure their margin covered the costs (which includes merchant fees, cash handling fees, etc.) of doing business - or went bust. They now charge a credit card surcharge simply because they can. Its purely a way of increasing profit because customers think its justified.

Richard.

 

[trippin_the_rift]

I think you misunderstand albatross710's point. Consider a retailer selling a widget for $100 that they buy from the wholesaler for $80. Their margin is $20. If the Amex merchant fee is 3% of the sale price then if the retailer was to absorb that their nett margin is $17. $3 is 15% of that $20 margin.

Of course their merchant fee has not suddenly increased - the merchant traditionally made sure their margin covered the costs (which includes merchant fees, cash handling fees, etc.) of doing business - or went bust. They now charge a credit card surcharge simply because they can. Its purely a way of increasing profit because customers think its justified.

Richard.

albatross710 also said the comparision to Visa/MC was less than 1%, not 1% of the margain.

Also if your margain is only 20%, how do you survive as a business?

 

[drewbles]

albatross710 also said the comparision to Visa/MC was less than 1%, not 1% of the margain.

Also if your margain is only 20%, how do you survive as a business?

In an answer, volume. Having worked in IT my entire professional life, I can safely say that a lot of the product being sold, either hard or a service such as internet access, is low margin.

Service industries such as ISP's make their money on Corporate customers. Residential have razor-thin to no margin on them. Once you've paid Telstra for space in an exchange for your DSLAM and your backhaul or a wholesale service and AGVC (backhaul for layer 2 DSL wholesale) you're then left with office costs, support, staffing, credit card charges, server room costs, high power bills and the most expensive of all, bandwidth.

If you want to talk about hardware having razor thing margins, look at MSY or CPL in Melbourne. They operate on massive turnover with a very very low percentage margin. Apple resellers have it worse. They don't even typically make 3-5% on Apple hardware sales, instead relying on third party accessories and extended warranty programs to make their cash. This is the reason that just about every Apple reseller will have a service department attached to it; it's one of the few ways they actually make a buck out of selling it (added to the fact that the Apple reseller agreement is so vicious, they require you to have $xx_,xx_x of stock on hand, and if something is end-of-lifed or superseded, you have to get rid of it within a certain timeframe, and you are required to purchase at least one item from every product group they sell for display).

IT is probably the worst industry for profit margin, right behind Aviation. What's the saying? What's the quickest way to make a small fortune? Start an airline with a large fortune

 

[trippin_the_rift]

In an answer, volume. Having worked in IT my entire professional life, I can safely say that a lot of the product being sold, either hard or a service such as internet access, is low margin.

Service industries such as ISP's make their money on Corporate customers. Residential have razor-thin to no margin on them. Once you've paid Telstra for space in an exchange for your DSLAM and your backhaul or a wholesale service and AGVC (backhaul for layer 2 DSL wholesale) you're then left with office costs, support, staffing, credit card charges, server room costs, high power bills and the most expensive of all, bandwidth.

If you want to talk about hardware having razor thing margins, look at MSY or CPL in Melbourne. They operate on massive turnover with a very very low percentage margin. Apple resellers have it worse. They don't even typically make 3-5% on Apple hardware sales, instead relying on third party accessories and extended warranty programs to make their cash. This is the reason that just about every Apple reseller will have a service department attached to it; it's one of the few ways they actually make a buck out of selling it (added to the fact that the Apple reseller agreement is so vicious, they require you to have $xx_,xx_x of stock on hand, and if something is end-of-lifed or superseded, you have to get rid of it within a certain timeframe, and you are required to purchase at least one item from every product group they sell for display).

IT is probably the worst industry for profit margin, right behind Aviation. What's the saying? What's the quickest way to make a small fortune? Start an airline with a large fortune

These examples go much deeper too, though. For example, large stores with apple ranges don't care about any margain on product because that is not how they make revenue. Businesses need to be smarter with their strategy and models - large volume works well but only for $100m+ companies. Under that it becomes increasing more difficult as their access to customers is more limited.

Airlines don't make a cent, but their Frequent Spender programs make a killing. Seriously, why bother trying to compete on price in a saturated market when you can generate more revenue by aligning that product with something much more profitable that has built-in subjective margains - like a FF prog.

As for merchant costs you could for example, go back to amex and say, our ave transaction size is $xx, if we increase this to $xx_, we want a 0.5% rate reduction. Or, only take amex if the transaction is over a certain amount. Bump up the marked price slightly and then advertise - ABC Pty Ltd does not charge BS CC fees like Competitor A, B and C do.

Seriously, there's a million ways to skin this cat and if 3% is going to kill your business, you need go get a job.

 

[Travel Guru]

albatross710 also said the comparision to Visa/MC was less than 1%, not 1% of the margain.

Also if your margain is only 20%, how do you survive as a business?

I work on a margin far below 20% and am definately not about to go hungry or lose my shirt, infact things have never been better.

I don't know that albatross was suggesting it was killing his business, he was merely stating an opinion.

3% might be costing me a few dollars, but there's no way known i'd ever work for someone else again, not once you have a lick of the icecream called freedom.
Sure business has its challenges, but none of them compare to having to work for someone else.

I'd be curious given your comments (which no offence came across as a bit on the arrogant side) to know what industry you're involved with where you dont think a business can survive and thrive on a 20% margin (or less for that matter).

TG