Amex lowers fees for small businesses in Australia

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The logo of Dow Jones Industrial Average stock market index listed company American Express (AXP) is seen in Los Angeles, California, United States, April 25, 2016. Reuters/Lucy Nicholson

American Express has declared it would lower fees for small businesses by 1 percentage point. The move is part of an aggressive expansion plan that seeks to double the credit card giant’s Australian footprint in two years.

As the company explores huge shifts in the payment landscape and deals with competition, American Express puts its attention to its biggest roll-out in Australia since 1954. It attempts to get more small businesses to accept Amex payments, which usually cost business owners more. As a result, several shops require higher credit card surcharges on Amex payments or opt not to accept them.

American Express’s Katrina Konstas, who is in charge of small merchants' businesses, revealed the company wanted to grow the number of Australians that accept Amex. She said the majority that took Amex payments were small businesses.

Ultimately, the company is lowering fees through partnerships with other businesses, including banks, to achieve further growth. "We want to make it a lot easier for merchants to accept American Express," Sydney Morning Herald quotes Konstas as saying.

Amex charges average merchant service fees of 1.58 percent of a transaction's value, Reserve Bank notes. This can be compared with 0.78 percent for MasterCard and Visa.

The cost for a small business, however, could be higher. Huge retailers are charged lower fees for accepting Amex cards.

Amex said the reduction in fees varies. Many small merchants can expect to pay rates of less than 2 percent for accepting Amex payments by the end of 2017.

Prior to its announcement of lower fees, the credit card company and Commonwealth Bank have sealed a deal that would allow small businesses to accept Amex for the same price as taking MasterCard or Visa payments up to a certain amount of turnover. Several small businesses currently have separate pricing packages with Amex.

Claire Roberts, CBA's executive general manager, has issued a statement to address the changes, saying the plan would allow small businesses to easily broaden the range of cards they accepted. "Consumers want flexibility in the way they pay for goods and services and by adding American Express we are now providing small businesses with card payment options at the same rate," she said.

Based on RBA figures, the number of American Express and Diners Club purchases combined has dropped from about 15 percent of the total credit. Banks have recently cut the value of the loyalty schemes attached to bank-issued Amex cards.

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