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Comment by eggoa | Hacker News Reader

For something as fungible as credit card transactions, it's hard to understand how a "brand" could be truly valuable. (Or is the grocery store cashier secretly really impressed when I produce my Amex Blue?)

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It's about consumers and merchants knowing they can trust the brand of the card to be a) accepted everywhere to reduce the complexity of managing multiple credit card accounts and b) fraud-protected so they know they won't have to pick up the tab for losing/having a card stolen.

Having customers view the Visa/Mastercard/Amex "brand" (aka network) in this light is very valuable.

Perks such as cash back, no foreign transaction fees, and miles/points are nice, but they're pretty standard across the different credit tiers of all the major cc providers.

Perhaps having an Amex was once considered prestigious, but speaking for myself and my friends in the mid 20's, credit card providers/payment networks are perceived as largely homogeneous. Nobody cares if you're throwing down an Amex or a Visa to split the Korean BBQ bill. If anything, you'll get a comment of "when are you switching off Amex, their network coverage sucks in Europe".

I will add my own opinion as a mid 20 year old male myself:

My friends and I do not view all cards the same. There are obviously "top tier" versions of each card provider, and those are the ones that are looked at with "Prestige"

Whether or not those are Visa, Mastercard, or Amex makes no difference. But if you have a Amex Black, or the metal Chase card with no limit, it does come with opinions.

At the end of the day you're right in that a card sometimes functions status symbol, just a less visible one than say a car. But its strength is weakening, and status can't compete with network coverage and fraud protection functionality. Can't wait for the day when we can do away with physical cards altogether.

Yeah, this struck me as odd:

> Who cares what card you have if you’re paying for your expensive meal through your smartphone’s digital wallet?

Digital payments didn't kill Amex-as-a-status-symbol, the productization and growing availability of credit cards of all brands did. A status symbol brand doesn't send unsolicited junk mail asking for people to sign up for its product.

It seems to me like the company is caught between a rock and a hard place: the only way to make the card popularly accepted enough that the high-end "status" cardholders can use it anywhere they like is to dilute the brand by convincing as many people as possible to use it.

I'm wondering if they can play the Apple role of sticking with the higher end, but smaller user base. They already have enough cardholders and usage to the point where not accepting Amex is pretty brain-dead.

That's well-stated.

I wonder why they couldn't just use a sliding fee - take a bigger fee only for larger transactions and secure agreements with retailers not to ask customers to use lower-fee cards when available (as opposed to trying to enforce it by law, which the article talks about), with the promise that accepting Amex will actually bring in these bigger spenders.

The AmEx brand is—or, at least, originally was—aimed at people who don't care about the cash or discount rewards most other cards offer, and would rather have massages in airports, on-call concierges, personal shoppers, and so on.

Just getting the mystical Centurion Card (aka the "Black" Card) requires being personally invited by the company after spending at least $21,000 a month on AmEx cards. They have no credit limit at all, and some people have made multimillion-dollar purchases using them.

> They have no credit limit at all

To be fair, none of AmEx's charge cards have a limit. But even the Centurion Card will get declined if you try to spend too much, they just don't tell you what "too much" is. I would even bet that the credit limit formulas across all their charge cards are the same and that the inputs are purely customer & purchase specific.

Note that AmEx DOES have credit limits on their credit cards, where the distinction between charge & credit cards is that you "have" to pay off the charge card balance each month (although that isn't even totally true any more).

And then other companies worked out you could print black cards and undercut them.

I guess if I want to make a multi-million dollar purchase I'll have to do some extra admin. That aside every other time I purchase from a retailer they and I get to benefit.

That's the irony of brands in the modern era. In a commodified market, where all services or products are virtually interchangeable, you either compete on price -- a race to the bottom with ever-declining margins -- or you move upmarket by competing on prestige and perception. Amex's prestige hasn't fundamentally changed how valuable the card is to hold, but it's signed up customers in the first place, and it's signed up an affluent segment of customer. (See: the article's note about the Amex customer's average spend vs. that of other cards.)

But brand relies to some degree on information asymmetry. As a consumer, you assume that a prestigious brand is somehow better, and to whatever degree your assumption is based on pure speculation, the stronger you buy into that assumption. These days, information is widely available at a moment's lookup. You can compare as never before, across as many scenarios as you like. Interchangeable services, like credit cards, are revealed for what they are. Couple this with the fact that cards are becoming a means to an end, and no longer the physical payment mechanism they once were, and the prestige and mystique of a certain color of plastic fades even faster.

These days, the benefits of holding one card over another can be reduced in seconds to a rough mathematical function. How many vendors accept this card? What are the annual fees? What are the interest rates? What is the expected value of the fringe benefits? Amex pioneered the loyalty card ("affinity card," to use the article's parlance) as a means of locking in better fringe benefits. But now everyone's got a loyalty card, and partners in the travel and retail sectors have deals with almost everyone.

This basically means that since Apple doesn't need to sell info, only services, then Apple Pay will win in the end?

But surely their is value in the brand when it comes to customer perceptions about how good Amex support is or how easy chargebacks are.

I agree that thinking Amex can be a "status" symbol is foolish unless they really up their marketing budget (after all, anyone could become a lifestyle brand if they tried). More importantly, thats not something consumers care about when picking a credit card.

Well thats how they've lasted...and theres a reason you have Visa...so...

I'm wondering how you assess, say, Louis Vuitton or Rolex?

I've live in New York and I've literally never been to a single bar or grocery store that accepts American Express.

Anyone know why this is?

For regular businesses, the transaction fees (both % and per transaction) are higher for AMEX than VISA or Mastercard. So a lot of small businesses don't take them.

With some processors, there's also a monthly fee if you take any AMEX, so it's better to not take it all.

Amex charges higher fees per-transaction. Because they're a charge card, they make their money off the transaction fees, and not off the interest rates a card accrues. Conversely, this means they have to charge more on the front-end to maintain profitability.

They also offer credit cards. They differ from VISA and Mastercard in that they underwrite many of the lines of credit themselves (they make about $5 billion per year on interest).

Yep - great to see them in trouble. Most small businesses hate them as they take from their bottom line.

IIRC amex also tried to stop retailers letting customers know just how much they charge per transaction and wouldn't let shops offer different prices to counter-balance Amex greed.

Overall they sound thoroughly nasty and I cheer their demise.

ps whenever I can I use cash at an independent business so they keep the 2-3% instead of some big bank.

>Overall they sound thoroughly nasty and I cheer their demise.

They're wonderful as a consumer, and I would be quite sad if they were to go anywhere. I've had multiple large companies try to screw me over, and I went to Amex and they went to bat for me and took care of the issue.

I have 100% confidence that I will be taken care of for all purchases related to my Amex card, which I cannot say even for my other "prestige" cards such as the Chase Sapphire Preferred, etc.

Is there a bank or credit issuer who doesn't act substantially the same?

Most AMEX cards are credit.

They charge significantly more off the top vs Visa/Mastercard, and they want their money before you get yours.

I appreciate it because its good for me as far as consumer protection, but I fully understand smaller businesses not wanting to deal with the added expense/hassle.

2.5% transaction fees instead of 2%.

The average grocery store has a profit margin of 1% to 3%, from what I understand.

Yeah, it's as simple as that. When their product that is 25% more expensive than competitors and less useful (accepted at less retailers), they deserve to get knocked off their pedestal. No one cares about the Amex brand. They are a commodity provider in the payment market.

Their consumer protections are significantly better than other credit card companies. That alone makes owning a gold card worth it to me.

It's 3.5% vs 2-3% on most cards.

https://www.nerdwallet.com/blog/credit-cards/retailers-accep...

So they are all taking a good wedge for very little.

Thing is they don't have to. Visa and co often have lower transaction fees for places like grocery stores exactly for that reason. Amex can adopt the same behavior.

Higher fees than the competition. Otherwise known as their "brand premium".

If you live in NYC, you must be actively trying to avoid places that accept AMEX. It's accepted practically everywhere in Manhattan at least.

If you live elsewhere in New York State then, yeah, AMEX charges higher fees to merchants so many smaller ones don't want to deal with them.

Where in New York do you live? Everywhere I go in Manhattan accepts Amex. I've even been to a bar that only accept Cash or Amex ("the Costco of bars").

I live in New York and have been to a lot of bars and grocery stores that accept American Express.

IIRC, Aqua Santa in Williamsburg used to only accept AMEX. Think they take other cards now though.

I have to assume you're lying.

The vast majority of bars and even most grocery stores in NYC accept AmEx.

I live in Manhattan and my experience has been that every bar accepts Amex.

Higher fees.

FWIW I live in Chicago and rarely find a place that doesn't accept AmEx.

You've never been to a Whole Foods?

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