Tag Archives: AMEX

AmEx Offering Incentives to Boost Card Acceptance

To keep up with Visa and Mastercard, American Express is offering sign-on bonuses to companies to offset start-up costs. Ranging from $10,000 to nearly $500,000, American Express sign-on bonuses are part of an effort to close the gap of the 1.3 million more U.S. locations accepting Visa and Mastercard in 2018 than those accepting American Express, which is accepted in 10.3 million locations, according to the Nilson Report. 

With few, sometimes no conditions, American Express salespeople not only offer these large payments, but they’re also offering discounted swipe fees to companies that agree to accept AmEx. While Visa and Mastercard may pay businesses to offset technology upgrades, sign-on bonuses with credit card companies were heretofore unheard of.

High-End Customers

Known for its high-end clients, American Express had always stayed competitive by charging higher interchange fees. Businesses agreed to these fees as the price of doing business with AmEx customers known for spending more, but Visa and Mastercard’s reward cards lured the high-end crowd from AmEx, leaving the company with fewer big spenders using the card in addition to fewer merchants accepting the card.

Matching Visa and Mastercard in Merchants

Credit Card Processing E-commerce SolutionsWith more than three million new merchant locations agreeing to American Express acceptance since 2017, the company expects to meet Visa and Mastercard numbers by the end of the year. More than merchant numbers, American Express stock shares also have some catching up to do with Visa and Mastercard. While AmEx shares rose 32% in the past five years, Visa and Mastercard boast a 190% and 230% increase, respectively.

Market Value

Compared to Visa and Mastercard’s market value ending in positive territory during the last eight years resulting in $386 and $279 billion in market value respectively, American Express’s market value experienced double digit losses during the last decade’s annual performances resulting in one third its counterparts’ value at $98 billion.

How AmEx Did It

Through its OptBlue program, American Express added most of its new merchants through third-party payment processors. Plus, internal sales people gave sign-on bonuses to more than 130 businesses since last year. Because AmEx both issues its cards, as well as operates the network on which the cards run, the company benefits from merchant acceptance on both sides of its business. With a 2016 pledge to reach Visa and Mastercard merchant numbers by 2019, American Express hopes to achieve higher billings and a larger scale of business.

Host Merchant Services: The Power of Knowledge

If your business wants to explore accepting AmEx cards, Host Merchant Services can help you make a decision regarding AmEx or any other aspect of merchant service. We’ll explain everything so you can make an informed decision! We go out of our way to educate our customers so that they fully understand pricing for AmEx, as well as our pricing model in general. Having this knowledge is important to ensure you aren’t overpaying, not just with us but with any processor! After we explain everything, the pricing will be so transparent that you’ll even know exactly what we make as a profit. How’s that for transparency?! 

Amex E-Commerce Safe Fast Bank Transfer

American Express Announces E-Commerce Bank Transfer

Starting later this year, American Express is offering online shoppers a brand-new way to pay retailers directly from their bank account, in real-time, without the need to use a debit or credit card in hand.

The new service, which will be offered to bank account holders in the U.K., even those without an American Express card, is set to roll out in the fourth quarter.

Here’s how the new Pay with Bank Transfer option will work.

What Is an American Express E-Commerce Bank Transfer?

Whereas before consumers were required to enter card details, thanks to American Express, this could all soon be a thing of the past. The service offers customers the option to instead make their payment via an American Express bank transfer with real-time payments directly from their bank account, rather than via their debit card. Customers will also be able to view their bank balances prior to confirming the transaction, and, according to American Express, will be able to benefit from “bank level data security.”

To make use of the service, all customers will have to do is click on the “Pay with Bank Transfer” button upon checkout, and select their bank from which they wish to make the purchase. They will then be redirected to their bank’s website where they will sign in and authenticate themselves, and approve the payment details before continuing to finalize the purchase.

Thanks to a wider initiative known as open banking, the data that people have stored with multiple financial institutions can be collected together and shared with trusted third parties, simplifying procedures while maintaining high levels of security.

Do I Need to Be an American Express Cardholder?

Not at all. The bank transfer service is open to anyone, whether they are an American Express customer or not. All that is required of the customer is a U.K.-based bank account.

What are the Benefits of an American Express E-Commerce Bank Transfer?

Amex E-Commerce Safe Fast Bank Transfer

Currently, bank transactions require having a physical card or card information to complete a transaction. With the Pay with Bank Transfer option, consumers have more options for paying retailers without sacrificing security.

Transactions are also much faster. The American Express service allows for instant transfers from customers to recipients, whereas paying with a credit or debit card would usually take a few days to a week to complete.

Where Can I Use the American Express E-Commerce Bank Transfer?

There will only be a handful of retailers utilizing the system at launch, however, a major rollout throughout 2020 will see the bank transfer system adopted by a wider range of online ecommerce retailers.

Some of those initially taking part in the American Express bank transfer scheme include JustGiving, Oak Furnitureland, Thai Airways, Richer Sounds, Hays Travel, and the Royal Lancaster London Hotel.

Amex Changes EMV Chargeback Policy

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The transition to chip cards, or EMV (Europay, MasterCard and Visa chip technology) hasn’t been an easy one for merchants to adopt. In order to ensure that they are compliant with new rules, merchants have had to upgrade credit card processing systems in order to accept the new chip cards. Failure to do so leaves the merchant responsible for fraudulent charges, since old systems leave gaps in security features.

As you can imagine, this can quickly add up to a frightening liability, all due to neglecting to upgrade their credit card processing system.

American Express Relieving the Stress of EMV Chargebacks

The EMV chargeback liability that could extend from merchants being responsible for fraudulent charges is huge, and American Express seems to understand that it might be a little too burdensome and punitive for merchants who are struggling to update expensive credit card processing machines. That’s why, by September 2016, American Express will no longer be charging back for fraudulent transactions under $25.

Sensing that maybe this isn’t enough, American Express is going to go even further beginning by the end of the year. In late 2016, they will place important caps on the total number of chargebacks a merchant faces, placing the cap at 10 transactions per card. This means that after the first 10 chargebacks for fraudulent activity, the credit card issuer will become responsible rather than the merchant.

All good things must come to an end, and that includes American Express’s enlightened chargeback policy. They’re giving merchants only until April 2018 to enjoy these lightened liabilities. After that, if a merchant hasn’t upgraded his or her credit card processor to a chip-enabled system, they will once again become fully responsible for fraudulent charges. That is hopefully enough motivation for merchants who haven’t made the switch yet.

switches from american express to visa

Costco Switches from American Express to Visa

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Millions of Costco members are finally ready to get rid of their American Express credit cards (aka Amex cards) to shop at Costco, the giant Seattle based Wholesale warehouse. Costco has about 81 million members worldwide, and the company has recently started accepting Visa cards instead of Amex cards. The move is a major advantage for customers who use any Visa-branded credit cards. Costco members are free to use their own Visa cards or use the newly issued Visa branded Costco store card, which will replace its existing TrueEarnings Amex branded store card.

Costco allows other forms of payments such as cash, ATM Cards and Electronic Benefits Transfer Cards. The move is expected to create competition among card issuing banks such as JP Morgan Chase, Bank of America, Citi and many others. Most of these issuers of Visa-branded cards have already started offering cash back on purchases at Costco and other warehouse stores. Consumers have the freedom to choose the best Visa-branded card that will work at Costco as well as other places such as gas stations, grocery stores and online stores.

The Costco Anywhere card issued by Citi offers 2% cash back on all purchases at Costco stores. The card also offers 1 to 4% cash back at other places such as gas stations and restaurants. The cash back amount is redeemable only at Costco stores. The issuance of the new Costco Anywhere card will not affect the customer’s credit scores, as Citi will not check customers’ credit reports. Another option is to use a Chase Freedom card, which offers 5% cash back at Costco, Sam’s and BJ’s through the end of this year.

American Express is expected to lose significant market share from the termination of its partnership with Costco. Most Costco members signed up for an Amex card to make purchases at Costco. These customers are likely to abandon their Amex cards, with the switch to the new cards now in place. Customers are free to use the Amex card at other stores where American Express cards are accepted. Amex charges applicable interest rates on any unpaid balances.

The business of credit card processing is highly competitive. The fortunes of credit card companies such as Amex are tied to the brand loyalty garnered from their partnership with companies such as Costco. Smaller credit card companies are badly affected if they lose a major partnership, such as Amex did with Costco. Visa is expected to get a significant boost from the changes made by Costco. The impact to other card issuers is unknown at this time. The merchant services segment is facing tough competition, and deals such as Costco’s certainly throws a monkey wrench into the entire business model.

Clearly, customers benefit more than anyone else in Costco’s decision to replace Amex. Customers can immediately benefit from a new Costco membership if they already own a Visa card.

AmEx To Refund $85 Million To Customers

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For this edition of the Official Merchant Services Blog, we take a look at yet another case of troubling consumer card practices.  Last week, we covered the news that Discover had been hit with a $200 million dollar fine by the U.S. Government for deceptive practices. Just today, American Express entered into a settlement with Bank Regulators, involving the company’s missteps in U.S. card practices.

American Express reached a settlement with several regulatory agencies to resolve previously disclosed card practices problems involving several of the company’s subsidiaries. The Federal Deposit Insurance Corporation (FDIC), Consumer Financial Protection Bureau (CFPB), Board of Governors of the Federal Reserve System (FRB), Office of Comptroller of the Currency (OCC), and Utah Department of Financial Institutions (UDFI) all agreed upon the settlements with AmEx.

The regulators cited violations including those relating to certain aspects of debt collection practices, credit card solicitations, late fee charges, the reporting of disputes to credit bureaus and new account approval processes. Reportedly, American Express has cooperated fully with the FDIC, CFPB, FRB, OCC, and UDFI. The company is strengthening its internal compliance processes and will continue to work closely with its regulators.

The settlement includes plans for developing a remediation process for each of the cited violations and an agreement to pay fines totaling $27.5 million. In accordance with the settlement, the company will establish funds totaling $85 million for customer refunds through its subsidiaries. The majority of those refunds are related to debt collection practices and late fee charges. Impacted customers will be notified as soon as possible.

Some of the subsidiaries involved include American Express Centurion Bank; American Express Bank, FSB; and American Express Travel Related Services Company, Inc.

If you are an AmEx customer, be on the lookout for any notifications that may imply you are entitled to a refund.  We will keep an eye on this story, as well as any other settlements for malicious card practices involving major U.S. Credit Card companies that may arise.

Industry Terms: AVS

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This is the latest installment in The Official Merchant Services Blog’s Knowledge Base effort. We want to make the payment processing industry’s terms and buzzwords clear. We want to remove any and all confusion merchants might have about how the industry works. Host Merchant Services promises: the company delivers personal service and clarity. So we’re going to take some time to explain how everything works. This ongoing series is where we define industry related terms and slowly build up a knowledge base and as we get more and more of these completed, we’ll collect them in our resource archive for quick and easy access. Today’s term is the Address Verification System, or AVS.

The system was designed by card issuers to aid in the detection of suspicious credit card transaction activity, and verify that the cardholder’s address info matches what the banks have on file. The service is provided as part of a credit card authorization for mail order/telephone order transactions (MOTO) or Internet e-commerce transactions.  A code is received with an authorization result that determines the level of accuracy of the address match. This verification helps secure the most favorable interchange rates for the merchant.

Visa, MasterCard, Discover, and American Express support this service, and when paired with a CVV confirmation the result is a secure, verified transaction. To verify a customer’s address, a merchant will need the cardholder’s billing ZIP code and the house or apartment number of the billing address.  The merchant does not need to enter in the street, city or state of the cardholder.  While AVS is not intended for use as absolute protection against suspicious transaction activity, it is an important step in securing non-face-to-face transactions. Host Merchant Services recommends to all merchants that they secure these types of orders with both AVS and CVV.

Industry Terms: CVV

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This is the latest installment in The Official Merchant Services Blog’s Knowledge Base effort.  We want to make the payment processing industry’s terms and buzzwords clear.  We will eliminate any and all confusion merchants might have about how the industry works.  At Host Merchant Services, we promise to deliver personal service and clarity.  So we’re going to take some time to explain how everything works.  This ongoing series is where we define industry related terms and slowly build up a knowledge base and as we get more and more of these completed, we’ll collect them in the resource archive for quick and easy access.

Card Verification Value (CVV)

In continuing with our E-Commerce focused blogs this week, I thought it would be appropriate to introduce the term Card Verification Value, or CVV. There are two types of CVV codes, called CVV1 and 2, respectively. The CVV1 is embedded in the magnetic stripe of track 2 of a card. The purpose of the first CVV is to verify data stored on a card is valid and was issued by a bank when used in person.

The second and more prominent CVV2 is a three-digit code (Visa, MasterCard) printed on the back of credit and debit cards.  American Express cards have a ‘Unique card code’ that is four-digits long and printed on the front. Discover has a 3-digit code on the back of its cards, but refers to this as a CID (Card Identification Number). These codes are used in card not present transactions occurring over the Internet, or MOTO as an added security feature to prevent fraudulent purchases. The code is meant to verify that the customer has the card in their possession.

Security Benefits

For Merchants:

Merchants requiring CVV2 codes for their card not present transactions can dramatically reduce fraud in their businesses. Using this extra layer of protection can stop breached or fraudulent cards from going through. Avoiding potential retrievals and chargeback fees.

For Consumers:

Entering your CVV2 code when purchasing online products verifies that you are who you say you are. Under Visa regulations, merchants cannot store CVV2 codes in their databases.  This means any card numbers lost in a breach would be less useful. In this sense, a consumer is protected on both sides of a transaction, once when verifying the purchase, and then again in terms of breach or fraud security.

Don’t Overlook Small Business Saturday

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For the past couple of weeks The Official Merchant Services Blog has been preparing you for the Holiday Shopping Season. We’ve discussed a lot of different strategies and services that merchants can use to boost their businesses on Black Friday and Cyber Monday. Much of what we’ve covered also applies to going forward through the entire shopping season.

Today we’re going to focus on a new “day” that’s been added to the rush and crush. Sandwiched in-between Black Friday and Cyber Monday is a new kid on the block: Small Business Saturday. Since Host Merchant Services has many small businesses in its customer base, we wanted to take a moment to spotlight this newer day of shopping focus and frenzy.

The Basics

First of all, what is Small Business Saturday? It is a shopping holiday created by American Express, held on the Saturday after Thanksgiving during one of the busiest shopping periods of the year. It’s not that old. It was first celebrated on November 27, 2010. Small Business Saturday is designed to be a counterpart to Black Friday and Cyber Monday –– which feature big box retail and e-commerce stores respectively. Small Business Saturday encourages holiday shoppers to patronize brick and mortar businesses that are small and local.

How it Did Last Year

One of the key elements of the campaign last year was its social media push. Small Business Saturday has a Facebook page –– found here –– and last year AMEX bought advertising inventory on Facebook that it gave to its small merchant account holders for the purpose of promoting them and the event. The Social Media buzz generated 1.5 million likes on Facebook, as well as getting 13p public and private organizations and 41 politicians involved in supporting and publicizing the effort.

The bottom line? The event did indeed boost sales. According to AMEX executive Mary Ann Fitzmaurice Reilly, the event provoked “a 28 percent rise in sales volumes for our small business merchants versus the same day in 2009.”

What’s 2011 Bring To S-B Saturday?

The most basic perk to the Small Business Saturday campaign is that it gives money back to consumers for shopping at local small businesses. As defined by American Express at their Small Business Saturday Link Here: “You can receive a one-time $25 statement credit when you register any eligible American Express® Card and use that Card to make a purchase of $25 or more at a small business on November 26, 2011.”

Merchant Services logo for Small Business Saturday

There are multiple ways to obtain the savings:

  • Register your American Express Card here.
  • Sync your Foursquare account to your American Express Card here.

FedEx this year also gave away 40,000 $25 gift cards, which have all already been claimed.

Also, AMEX continues its robust social media marketing through the event, giving $100 in free Facebook advertising to 10,000 qualifying merchants.

Why You Should Get Involved

A survey by American Express  found 93% of consumers believe shopping at small businesses is important, and are backing that sentiment up by spending about a third of their discretionary income at local small businesses. This prompted AMEX to initiate the campaign in the first place. And if you are a small business merchant, AMEX is going the extra mile to get you involved in the perks and promotions of this holiday.

Even if you are a late-comer to this event and have missed out on the free Facebook ads or the free gift cards from FedEx, there is still quite a lot of value to be had from participating in Small Business Saturday. The $25 credit program applies no matter what else you do. But there’s also these amazing resources still available:

  • From AMEX you can get free in-store signage, and a free online marketing kit.
  • You can use AMEX’s Go Social app to create mobile-based deals for your American Express card-wielding customers.
  • A joint venture from Google and YouTube offers up My Business Story which lets you create custom videos using YouTube’s editing tool to entice your customers.
  • YourBuzz –– a tool that allows users to read and respond to customer reviews and online mentions in one location –– is offering $200 in free advertising credits on LinkedIn Ads ($100 for 6,500 business owners) and Facebook ($100 for 10,000, which is all used up).
  • FedEx offers a 20% discount on printing for  Small Business Saturday-related promotional materials through Nov. 26.

Too Early To Tell?

So what do you think? Will Small Business Saturday catch on? Cyber Monday seems to be gaining some traction, fueled by the rapid growth in online shopping and e-commerce, and standing on the precipice of a predicted boom in mobile payment business. Black Friday is still going strong, with big chains like Toys”R”Us and BestBuy fueling it year in and year out. Is there room for Small Business Saturday? Are you a small business merchant and have you participated in this event last year? Will you be doing it this year? Feel free to share you thoughts and insights on this bold campaign from AMEX. I know I’m particularly interested in hearing about what kind of use you’ve gotten out of the social media marketing tools AMEX is providing with this.

Durbin Amendment Almost Here

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The Official Merchant Services Blog once again takes up the task of analyzing the media reports revolving around the Durbin Amendment and the changes it will bring to how banks do business with their customers because of its cap on debit card swipe fees. We continue to use Host Merchant Services‘ own analysis as the foundation of the comparisons we make regarding other media sources and their take on the legislation and its impact.

Durbin on Durbin

The first article comes from a Chicago-based radio station WLS 890 AM. It’s an interesting read because it quotes the legislation’s namesake, Senator Dick Durbin from Illinois. It’s one of the few articles that includes Durbin’s perspective on the legislation as we get closer to the October 1 date of when the law takes effect. The article begins with a brief explanation of what Durbin sought to do with the legislation:

“Sen. Dick Durbin told reporters Tuesday afternoon that the debit card fees retailers have to pay will go down Saturday thanks to the Durbin Amendment.”

It then offers a lively retort from J.P. Morgan Chase executive Jamie Dimon: “The big boss at J.P. Morgan Chase, Jamie Dimon, calls this ‘price fixing at its worst’ that will surely cause banks to raise fees on customers with deposit accounts. “

While many of the articles on this amendment have been dancing around the confrontation between consumers and banks over the Durbin Amendment this article dives right into the rhetoric, giving it a much more active tone for the reader and an insight into the debate that framed and spawned the legislation. It helps that the article ties this confrontational perspective into the legislation’s author and Durbin’s motivation for working on the amendment. Citing a letter that Durbin wrote to Dimon back in April, the article states: “Durbin said to Dimon, ‘Your industry is used to getting its way with many members of Congress and with your regulators. The American people deserve to know the real story about the interchange fee system and the ways that banks in general — and Chase in particular — have abused that system.’ “

But the basic conclusion is pretty much the same as the other articles focusing on the amendment and what changes it will bring on October 1. The conclusion is that banks will react by creating more fees for their customers and just recouping the losses from the swipe fee cap in other areas not covered by the legislation. Durbin is quoted in the article, calling that tactic “indefensible” but conceding it is the likely outcome of the amendment. The article sums it up: “So what the government giveth, the banks may take away.”

The Cost of Doing Business

The next article we look at is an Associated Press piece located on Bloomberg’s website. It’s a report that reveals how much money American Express spent in the second quarter of this year to lobby Congress and fight against the implementation of the Durbin Amendment.

“American Express Co. spent $610,000 in the second quarter to lobby the federal government on rules involving the fees charged to merchants for processing payments and other issues, according to a disclosure report.”

The article notes that the company spent the same amount of money in the previous quarter of 2011, but that they spent 3% more money in the second quarter of 2010 comparatively. The article also notes that Amex doesn’t offer debit card services, but does offer interchange services on credit card payments, suggesting that was the reason it spent money to lobby Congress on the topic. The money wasn’t solely spent on lobbying against the Durbin Amendment. And the article notes that: “Amex representatives also lobbied the federal government on legislation involving online tracking of consumer behavior and the protection of personal information, cyber security, financial regulatory reform, consumer financial protection and issues related to reloadable prepaid cards, patent reform, tax reform and reform of the U.S. Postal Service.”

So what we see in today’s Countdown to Durbin is a look at how heated the debate still is between the legislation’s namesake and the big banks that are targeted by the reform. The intensity of this debate was such that American Express even spent more than $600,000 in a single quarter to lobby against it in 2011.