Concerning credit cards for my

I have to find information concerning reasons why companies discriminate in their use of credit cards. An example is "Bring your VISA because we do not accept American Express."

Thanks in advance.

 

RE: American Express

I work at a restaurant that accepts Visa, MasterCard, Discover, and even Diner's Club, but not American Express. I once handled a sales call from someone selling American Express merchant services, who stated that they charge "only 1% more" than Visa and MasterCard. I believe it's about 3% for the Big 2, and about 4% for American Express. That refers to the amount the restaurant gets deducted from its credit card receipts when its bank presents them to AmEx for payment. The restaurant pays some sort of additional fee for depositing them at its bank.

In the early 90's, groups of restaurants in major cities, especially New York, quit accepting AmEx because the charges were so high. They may have been well over 4% at the time. Visa took advantage of this with its "Visa...it's everywhere you want to be" advertising campaign. The thrust of this message is that Visa is accepted everywhere, but American Express isn't. Therefore, nobody really needs AmEx anymore, or so the story goes.

Nevertheless, AmEx provides better service to its customers than most Visa or MasterCard banks do. (It depends on which bank issues the other card, of course.) Therefore, a lot of people want to carry and use the card. They agree with the American Express advertising slogan, which is "Don't leave home without it."

So restaurants find that it's against their own interest to accept the card because the charges are so high, but it's against their interest to refuse the card because they may lose customers, many of whom have a lot of money to spend at restaurants. Many restaurants therefore accept the card, sometimes reluctantly. Expensive restaurants are practically forced to accept the card, since otherwise they would lose many of their best customers.

The latest issue of Fortune magazine has an interesting article about American Express. It points out that every single restaurant in New York that quit accepting AmEx in the early 90's protest has now started accepting it again. It also mentions that AmEx is trying to get cheaper stores and restaurants to accept the card. Wal-Mart now accepts the card, and there is even a Costco American Express card!!

One more point: there is quite a bit of competition between American Express and the other cards, especially with Visa, the largest. Discover and MasterCard provide additional competition. The market is quite competitive because most people have more than one card. If an inexpensive restaurant (to use my case as an example) refuses to accept AmEx, customers almost always have another card like Visa or MasterCard that they can use instead. I have never had a single customer, in at least 50,000 meals, who has been unable to pay for the meal when informed that we don't accept American Express cards.

Good luck on your report.