- American Express added 1 million U.S. merchants last year to achieve “virtual parity” with competitors Visa and Mastercard, CEO Steve Squeri announced Friday in the card network’s latest quarterly earnings call.
- To catch up to market-leading payment networks, former CEO Ken Chenault oversaw the creation of the OptBlue program, which aims to entice small businesses to accept AmEx by offering lower costs.
- The company offered sign-on bonuses of up to $450,000 to a small number of businesses to accept the network, Banking Dive reported in November.
“After signing millions of merchants in recent years, we’re there,” American Express Chief Financial Officer Jeff Campbell said Friday, according to Bloomberg. “Our challenge now, which will take some time to change, is perception will lag reality.”
Some merchants had been reluctant to accept American Express because of its interchange fees, which are higher than those of Mastercard or Visa, because AmEx doesn’t make as much in interest off of its customers. Many of AmEx's products are charge cards whose balance must be paid off each month, whereas credit cards allow for rolling balances and pass double-digit interest rates on to customers.
Now, the gap between AmEx's swipe fees and those of other payment networks is shrinking. Visa and Mastercard swipe fees had a weighted average of 2.12%, according to U.S. News & World Report. AmEx’s rate was 2.37% last year, compared with 2.48% five years earlier, Bloomberg reported Friday.
Additionally, Visa and Mastercard have blurred any market advantages American Express might have offered. AmEx traditionally sold itself on the perks it could give its wealthier clientele. But other networks in recent years have been able to partner with issuers such as Citi to offer rich cash-back and travel rewards.
American Express has caught up gradually, since announcing in 2016 that it could reach parity by the end of 2019. The network added 3 million merchant customers in 2017 and 2018, said Melanie Backs, the company’s vice president of public affairs.