eBay customers will no longer be able to use American Express cards to pay for purchases starting this summer.
The online marketplace announced Wednesday that it would no longer accept the cards as of August 17. He blamed the “unacceptably high fees” imposed by AmEx to process transactions.
It’s a blow to American Express, which has become a favorite among Gen Z consumers and whose customers tend to be the most attractive among merchants, as they tend to spend the most money per month on its cards.
eBay isn’t the only company to let AmEx down on its fees to retailers, which can be as high as four percent.
Retail giant Costco also walked away from the card company nearly a decade ago. Chains makes smaller restaurants also stopped accepting it.
eBay customers will no longer be able to use American Express cards to pay for purchases starting this summer
It’s a blow to American Express, which has become a favorite among Gen Z consumers. Australian model Elle MacPherson is seen here promoting American Express RED.
In recent years, merchants have become increasingly combative with payment processors over the fees they charge for accepting payments.
Amazon had a similar fight with Visa in the UK two years ago, where it threatened to abandon the payment processor over the “high fees” it charged for making transactions.
Like other payment processors, AmEx takes a percentage of every transaction a merchant processes in its network.
The fee varies by industry, and the fees paid by larger merchants are often a closely guarded trade secret.
The National Retail Federation says the average fee for accepting a credit card is about 2 percent, but it can be as high as 4 percent on premium rewards credit cards like AmEx.
eBay spokesman Scott Overland said eBay customers have other new ways to pay. The site increasingly offers customers different payment options, including Buy Now, Pay Later services including Klarna, Affirm and PayPal.
In its official statement, eBay added: “At a time when payment processing costs should be declining due to technological advances, investments in fraud capabilities, and customer protection by merchants like eBay, payment fees ‘Credit card transactions continue to increase unabated due to lack of significant competitive information.’
In a statement, American Express says eBay’s cost to accept AmEx cards is “comparable to what eBay pays for similar cards on other networks” and that AmEx cardholders typically spend twice as much on eBay as they do on other networks. networks.
“We view eBay’s decision to abandon American Express as a payment option for consumers to be inconsistent with its stated desire to increase competition at the point of sale,” said AmEx spokesman Adam Isserlis.
AmEx has been on a campaign, under current CEO Steve Squeri, to be a more universally accepted payment option and combat the image that it can only be used for travel, dining and luxury shopping in dense urban areas.
AmEx says that as of 2019 its cards are now accepted in 99 percent of places where Visa and Mastercard are accepted in the US.
Analysts at Keefe, Bruyette & Woods estimate that eBay may account for about 0.5 percent of AmEx’s global network volume.
Consumer advocates said eBay’s decision to abandon AmEx shows the need for Congress to address processing fees, which are sometimes known as “swipe fees.”
Like other payment processors, AmEx takes a percentage of every transaction a merchant processes on its network.
According to the nonprofit Merchants Payments Coalition, swipe fees have more than doubled over the past decade, reaching a record $172 billion last year when debit cards and all credit card brands are included. .
Fees are the largest operating cost for most merchants after labor and raise prices for the average family by more than $1,100 a year, the group said.
“AmEx is just a symptom of the underlying problem,” Doug Kantor, an MPC Executive Committee member and general counsel for the National Association of Convenience Stores, said Wednesday.
‘Visa and Mastercard centrally set their prices for high usage fees that are uniformly charged by all banks that issue cards under their brands, rather than allowing banks to compete for merchants’ business.