"The retailer has essentially no power to avoid this, as long as the card issuer's take remains below the point at which it would be unprofitable to service their pool of customers."
AMEX is really on the brink of this point currently in the US. A lot of places simply do not accept AMEX and a lot of AMEX customers carry different cards because of that. Since merchants know that the average AMEX customer usually carries another card as well they are often ok with not accepting AMEX.
Currently the main selling point of AMEX are rich people that swear by their black amex card and are really annoyed when somebody makes them take out their lowly visa. So places that cater to rich people or hope to cater to rich people usually try to take the hit and accept AMEX.
> To the point that if a place won’t take American Express (like Costco) I’ll just move along.
I understand the sentiment and I will use my Amex preferentially over any other card for the same reason. But it’s kinda funny to use Costco as the example. They have a famously customer friendly return policy.
I had to take a few minutes to understand this case. So essentially, merchants who were already accepting Amex cards couldn't tell their customers to use a Visa card instead if they had one. If a merchant didn't want to accept Amex cards then they shouldn't have partnered with Amex.
Amex (and other CCs) walk a fine line. End customers are what makes things tick. To get more of them, they offer to side with them in any disputes.
If they abuse merchants enough, they won't accept CCs. But refusing Visa or Mastercard means turning away a lot of customers. Refusing Amex means turning away some. If merchants start turning away cards, the card is less useful. Amex is not a stand-alone card because it sometimes gets turned away. You need a real CC too. Merchants can average things out over time, so while the 1 in 100 dispute is unfair, stressful, rant-inducing stuff, it ultimately only costs around 1%. I assume this is less then what you lose from turning the card away. Since they are businesses, they are obliged to make more rational decisions. This makes them a better target for abuse.
> I see a place that won’t take Amex, but no visa or mc?
Lots of places won't take AmEx or Discover (some of the highest fees in the business.)
CostCo currently only takes Visa (no MC.) Sam's used to only take Discover. It's rare, but it happens. In this case it's also only for "credit" purchases, "debit" is ok for any card, but the fees are way less for "debit" than "credit".
Amex get away with it because their customer base is a niche of higher income earners. Merchants would rather not accept Amex, but a lot of them want to attract that demographic as their customers. So they each make their own decision about how to balance those concerns.
> Sure not everywhere takes amex but the majority do
Perhaps in the US, but elsewhere around the world Amex is barely ever accepted.
That said this duopoly only really applies to internationally accepted credit cards, lots of countries have alternative payment methods, but these generally don't reach beyond the borders.
I'm an Amex user who has a second card in my wallet, but I avoid giving business to stores that don't take Amex. I feel like it's a sign that they don't understand me, and don't want my business.
Merchants don't accept them because of their high merchant fees, but AmEx don't have high merchant fees for some flippant reason like to create a 'luxurious image' - they do it to create value for their card holders.
Some merchants reject cards with higher fees; i.e., Amex is not accepted at some merchants with lower margins (i.e., grocery stores).
It would be impractical for merchants to accept some branded cards and not others. Imagine "we accept "Chase Premium One" card, but not "Chase American Airlines" card." Very confusing for consumers. If it's a whole category, like Amex, it's easier to refuse it (besides, low income consumers are unlikely to have an Amex card).
Amex is a clear example of where the power and focus lies here.
Amex gives its customers great benefits. It charges merchants an arm and a leg to do that. Literally double the fees. Merchants then refuse to accept it a lot of the time, but every time a customer "only has an Amex card" they lose business, so a lot do accept it, grudgingly.
Of course customers prefer to use their Amex card whenever they can, because benefits. So they often pretend to "only have an Amex card" (much like "the machine is broken" in taxis, that then miraculously fixes itself when you pull out some loose change as "the only cash I have").
The merchant doesn't generally have much choice. I have some friends who ran a restaurant, and they stopped accepting Amex because the fee was too high. They sold the restaurant to an employee and he immediately started accepting Amex again. Too many high spending clients use it and he didn't want to miss out.
Also, even though Costco only accepts a single brand of card (used to be Amex, now Visa), despite their size and market power they accept any Visa card a customer presents.
Yeah, but I'm in the demographic being discussed in the article: I'm an AMEX cardholder for the sole purpose of being able to shop at Costco. The AMEX doesn't otherwise come out of my pocket, for the simple reason that there are places that won't take it and I'm too lazy to turn around and look for the sticker on the door. When the Costco contract drops, I'm almost certainly going to cancel the account.
AMEX is really on the brink of this point currently in the US. A lot of places simply do not accept AMEX and a lot of AMEX customers carry different cards because of that. Since merchants know that the average AMEX customer usually carries another card as well they are often ok with not accepting AMEX.
Currently the main selling point of AMEX are rich people that swear by their black amex card and are really annoyed when somebody makes them take out their lowly visa. So places that cater to rich people or hope to cater to rich people usually try to take the hit and accept AMEX.
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