Hoping to tap into the e-commerce and small-business trend, American Express has lowered its merchant service fees for small-volume vendors.
Companies handling less than $5,000 a year in American Express charges can pay just $5 a month. The new fee structure was a result of research revealing merchants preferred "flat fee" pricing, as opposed to paying a percentage of their total sales in merchant fees, says Joanne Fisher, AmEx director of public affairs. "Some people don't want to calculate what they're going to owe month by month," Fisher explains. "You can plan for what you're going to owe every month."
This is a big issue for small business. Those who accept credit cards from customers can pay upward of 5 percent in processing and handling fees charged by merchant services. Even AmEx's average discount rate, or the percentage fee paid to AmEx by the merchant, is 2.73 percent, or $137.50 on purchases of $5,000. The new program amounts to $60 a year.
If a company tops the $5,000 threshold, they're switched to the appropriate discount rate, Fisher says, adding that "that's good for them because their goal is to grow the business."
For their parts, MasterCard and Visa don't set their own fees, deferring the task to the banks that issue cards. According to Fisher, AmEx saw an opportunity to grow two businesses: theirs, and that of small businesses.
"We wanted to help small business with a flexible pricing solution," she says. "This also helps small merchants grow."
Tiffany Hilton - Ketchum - 650-432-4185
American Express: Joanne Fisher - 212-640-7552
MasterCard: Ed Dixon - 914-249-5028 Jeff Zbar is a homebased writer, speaker and author of Home Office Know-How (Upstart Publishing).