Another retailer bans American Express, joining revolt led by Costco

eBay customers will no longer be able to use American Express cards to pay for their purchases starting this summer.

The online marketplace announced on Wednesday that it would no longer accept the cards from August 17. She blamed the “unacceptably high fees” AmEx imposed for processing transactions.

It’s a huge blow to American Express, which has become a favorite among Gen Z consumers and whose customers are often the most attractive among merchants because they tend to spend the most money per month on their cards.

eBay isn’t the only company to drop AmEx over its fees to retailers, which can be as high as four percent.

Retail giant Costco also left the card business nearly a decade ago. Smaller restaurant chains also stopped making them.

It’s a huge blow to American Express, which has become a favorite among Gen Z consumers. Australian model Elle MacPherson is here promoting the American Express RED

Merchants have become increasingly combative with payment processors in recent years over the fees they charge for accepting payments.

Amazon had a similar battle with Visa in Britain two years ago, where it threatened to drop the payment processor over “high fees” it charged for moving transactions.

Like other payment processors, AmEx takes a percentage of every transaction a merchant processes on its network.

Compensation varies by industry, and the fees paid by the largest traders are usually a closely guarded trade secret.

The National Retail Federation says the average fee for accepting a credit card is about 2 percent, but can be as high as 4 percent for premium credit cards like AmEx.

eBay spokesman Scott Overland said eBay customers have other new ways to pay. The site is increasingly offering customers a variety of payment options, including Buy Now, Pay Later services including Klarna, Affirm and PayPal.

In its official statement, eBay added: ‘At a time when the costs of processing payments should be falling due to technological advances, investments in fraud capabilities and customer protection by merchants like eBay, transaction fees for credit card transactions continue to rise unabated due to a lack of meaningful information. competition.’

In a statement, American Express said eBay’s fees to accept AmEx cards are “comparable to what eBay pays for similar cards on other networks” and that AmEx cardholders at eBay typically spend double what they spend on other networks.

“We believe eBay’s decision to remove American Express as a payment method for consumers is inconsistent with their stated desire to increase competition at the point of sale,” AmEx spokesman Adam Isserlis said.

AmEx, led by current CEO Steve Squeri, is on a campaign to be a more universally accepted payment option – and to 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 the places where Visa and Mastercard are accepted in the US.

Analysts at Keefe, Bruyette & Woods estimate that eBay could represent about 0.5 percent of AmEx’s global network volume.

Consumer advocates said eBay’s decision to drop AmEx shows that Congress must address processing fees, also 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 brands of credit cards are included.

The fees are the highest operating expense after labor for most merchants and drive up prices for the average household by more than $1,100 a year, the group said.

“AmEx is just a symptom of the underlying problem,” Doug Kantor, MPC Executive Committee member and General Counsel of the National Association of Convenience Stores, said in a statement Wednesday.

“Visa and Mastercard each centrally set the price of high swipe fees that are charged uniformly by all banks that issue cards under their brands, rather than letting the banks compete for merchants’ business.