Why American Express is Actually a Prestigious Offering
By Ryan Goldsman, CFP®, PAIP®
Like many people, the weekend means groceries, errands, a dinner with friends, and many more activities that require the presence of a wallet.
This past weekend was an eventful one as four different restaurants were visited, three different coffee shops, and close to ten other merchants. For the first time, I counted the number of merchants that had a note on the payment system “No Amex” or “We do not accept Amex” and there were many of them.
American Express has been offering credit cards since 1958, and for decades was viewed as a luxury offering. The annual fee was traditionally higher than comparable cards, the balance had to be paid each month, and of course the rewards were far better than what was offered by other credit cards such as Visa and Mastercard.
The challenge faced by American Express holders today is having their cards accepted… or is this really a challenge?
Discussing the matter with a very good friend, and very smart person (to boot), she pointed out that many of the places I purchased goods and services are not the core merchants visited by many other Amex customers. She was right.
For those eating at any fast food or quick serve restaurant, accepting Amex is a “nice to have” instead of a “must have”. For fine dining however, not accepting Amex could cost a lot of revenue.
The fight is on!
Since inflation picked-up over the past year, merchants and their customers have been fighting it out. Merchants are trying to cut the costs they can, while consumers are trying get more for every dollar spent. One way to do it, is to pay with an Amex instead of a traditional Visa or Mastercard.
Where the item or service being purchased has a thin margin or a high cost of goods sold, then refusing Amex can be justified. Where the clientele is higher end, or the cost of goods sold is minuscule (when compared to the purchase price), then the refusal or Amex may need to be rethought.
As an example, if I were to purchase an online news subscription or a luxury good (such as a $5,000 purse), then it makes a lot of sense for the merchant to accept all credit cards.
As is always the case, there are merchants that will accept all payment types and are easy to do business with. Others are not so easy, but hasn’t this always been the case? Certain companies consider the client experience and provide excellent customer service. Others don’t. The acceptance of Amex is no different.