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I wonder how Amex is able to make money in Europe? They still have a quite generous rewards program (not as generous as the US, but not bad) and I thought they

I wonder how Amex is able to make money in Europe? They still have a quite generous rewards program (not as generous as the US, but not bad) and I thought they always charged high tx fees (which is also why not all merchants chose to accept it). But the argument being that they also have the high earners = high spenders in their network, and merchants can attract more of those customers by accepting Amex. If the cap was at 0.3%, how can they be any different than MasterCard/Visa cards, which usually don't have reward programs here?

maccard 6y ago
> I thought they always charged high tx fees (which is also why not all merchants chose to accept it). I used to work in a PC retail/repair shop and the reason we didn't take amex wasn't because of the fees, it was because they held the balances for longer than Visa/MC, and occasionally we had bills to pay in that time period too!
avianlyric 6y ago
The cap only applies to transactions that have three or more entities involved. For Mastercard/Visa you will have at lease three entities involved: 1. The retailer 2. The card network Mastercard/Visa 3. The card issuer (the customers bank) Amex dodge this by being both the card network and the issuer. So there are only two parties involved in their transactions. 1. The retailer 2. Amex So they charge a much higher interchange than Mastercard/Visa can. Which is also the reason why there will never be an Amex competitor in Europe. No merchant would ever sign up to anew card network that charged more and had no customers. Equally no customer would signup for card they couldn’t use anywhere.
- martinald 6y ago
  Stripe etc don't charge more for Amex in Europe than Visa/MC though. Any ideas how they do that? I assumed they would pass on the higher prices.
  - avianlyric 6y ago
    Stripe’s pricing is quite a bit higher than many of their competitors. They roll up what is quite a complex pricing structure (there are pages and pages of network fees to consider) into a single number. For most people not having to deal with the details makes Stripe worth it. But once to get to a certain scale it becomes much cheaper to use a competitor, and just have people working full time on understanding and managing the fees involved.
    - martinald 6y ago
      Yeah, quite interesting that. Adyen charges ~1% for Visa and MC in Europe, but 3.95% for Amex. Stripe just charges 1.9% for all European cards, so they are actually significantly cheaper than Adyen to accept Amex.

maccard 6y ago

> I thought they always charged high tx fees (which is also why not all merchants chose to accept it). I used to work in a PC retail/repair shop and the reason we didn't take amex wasn't because of the fees, it was because they held the balances for longer than Visa/MC, and occasionally we had bills to pay in that time period too!

avianlyric 6y ago

The cap only applies to transactions that have three or more entities involved. For Mastercard/Visa you will have at lease three entities involved: 1. The retailer 2. The card network Mastercard/Visa 3. The card issuer (the customers bank) Amex dodge this by being both the card network and the issuer. So there are only two parties involved in their transactions. 1. The retailer 2. Amex So they charge a much higher interchange than Mastercard/Visa can. Which is also the reason why there will never be an Amex competitor in Europe. No merchant would ever sign up to anew card network that charged more and had no customers. Equally no customer would signup for card they couldn’t use anywhere.

martinald 6y ago
Stripe etc don't charge more for Amex in Europe than Visa/MC though. Any ideas how they do that? I assumed they would pass on the higher prices.
- avianlyric 6y ago
  Stripe’s pricing is quite a bit higher than many of their competitors. They roll up what is quite a complex pricing structure (there are pages and pages of network fees to consider) into a single number. For most people not having to deal with the details makes Stripe worth it. But once to get to a certain scale it becomes much cheaper to use a competitor, and just have people working full time on understanding and managing the fees involved.
  - martinald 6y ago
    Yeah, quite interesting that. Adyen charges ~1% for Visa and MC in Europe, but 3.95% for Amex. Stripe just charges 1.9% for all European cards, so they are actually significantly cheaper than Adyen to accept Amex.