Voting: today and everyday!
One of the great things about living in a democracy is that you get to vote — and not just today at the polls, though of course you should do that. You also get to vote with your pocketbook — something that I practice assiduously.
I was reminded of this the other day when I went to make a big purchase at a store on St. Armand’s Circle — an $18 pair of earrings. I whipped out my American Express (AEX) card and was told, politely, but firmly, that the store doesn’t take American Express. While I do keep a different card for just such occasions, I’ve also often walked away many times figuring that the store doesn’t want my money enough to let me pay the way I choose to pay. My guess is that if those earrings had cost $1,800 or $18,000 — after all, this is St. Armand’s — they probably would have been willing to accept whatever card I handed them.
What’s an annoyance to me and, I’m guessing hundreds if not thousands of others, appears to have caught the attention of the Department of Justice, judging by the 10Q that Mastercard International (MA) filed a short time ago. In the filing, the company notes a new investigation by DOJ that was launched on Oct. 10:
On October 10, 2008, the Antitrust Division of the DOJ issued a CID to MasterCard and other payment industry participants seeking information regarding certain rules relating to merchant acceptance, particularly with respect to merchants’ ability to steer customers to payment forms preferred by merchants. The CID seeks documents, data and narrative responses to several interrogatory and document requests which focus on reasons merchants may have decreased their acceptance of certain cards, information on penetration rates by merchant category, co-brand cards and transactions in various countries.
In a democracy, people don’t just get to vote for whomever they want today. They also get to vote with their wallets and pocketbooks too.
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November 4th, 2008 at 12:17 pm
While I am sure there are some merchants who do not take the Amex card because of restraint of trade by other card companies, some of my small business clients do not take the Amex card because that card charges merchants more. It is a simple matter of the merchant voting with their dollars.
November 4th, 2008 at 5:49 pm
the merchant in question took the same liberty you are advocating, namely, voting with their wallet (by not accepting your AMEX).
November 5th, 2008 at 1:50 pm
Agree with first two posts. Since amex merchant fees are materially higher than Visa/Mastercard/Discover, each business has to judge the tradeoff of merchant fee vs. lost sales. I doubt that had it been a higher price sale they would have accepted Amex. To have a merchant agreement in place and decline the card is a clear violation of the agreement. You either accept or not.
Amex is my favorite personal card - great service and website. But it is my least favorite from the other side - due to inflexibility and high fees. (We have merchant agreements with Amex/Visa/Mstr & Discover.
I am surprised that low margin businesses like gas stations and grocery stores accept Amex. The 25-50bp difference in merchant fees must materially impact their net.