This story appears in the
November 1999 issue of
Startups.
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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."
Contact Sources
Visa:
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).