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Another retailer bans American Express, joining revolt led by Costco
eBay customers will no longer be able to use American Express cards to pay for purchases from this summer.
The online marketplace announced Wednesday that it would no longer accept the cards from August 17. It blamed the 'unacceptably high fees' imposed by AmEx for processing transactions.
It is a blow to American Express, which has become a favorite among Gen Z consumers, and whose customers are often the most attractive among merchants as they tend to spend the most money per month on their cards.
eBay is not the only company to drop AmEx over its fees to retailers, which can be as high as 4 percent.
Retail giant Costco also walked away from the card company nearly a decade ago. Smaller restaurant chains have also stopped taking the payment processor.
eBay customers will no longer be able to use American Express cards to pay for purchases from this summer
It is a huge blow to American Express, which has become a favorite among Gen Z consumers. Australian model Elle MacPherson is seen here promoting the American Express RED
Merchants have become increasingly combative with payment processors in recent years over the fees they charge to accept payments.
Amazon had a similar fight with Visa in the UK two years ago - where it threatened to drop the payment processor over 'high fees' it charged on putting transactions through.
Like other payment processors, AmEx takes a percentage of each transaction a merchant processes on their network.
The fee varies by industry, and the fees that the largest merchants pay are typically a closely guarded trade secret.
The National Retail Federation says the average fee to accept a credit card is roughly 2 percent, but can be as high as 4 percent on premium rewards credit cards like AmEx.
eBay spokesman Scott Overland said that eBay customers have other new ways to pay. The site has increasingly been offering customers different payment options including Buy Now, Pay Later services including Klarna, Affirm and PayPal.
In its official statement, eBay added: 'At a time when payment processing costs should be declining because of technological advancements, investments in fraud capabilities and customer protections by merchants like eBay, credit card transaction fees continue to rise unabated because of a lack of meaningful competition.'
In a statement, American Express says that eBay's cost to accept AmEx cards is 'comparable to what eBay pays for similar cards on other networks' and that AmEx cardmembers typically spend double at eBay what is spent on other networks.
'We find eBay's decision to drop American Express as a payment choice for consumers to be inconsistent with their stated desire to increase competition at the point of sale,' said AmEx spokesperson Adam Isserlis.
AmEx has been on a campaign, under its current CEO Steve Squeri, to be a more universally accepted payment option - and combat the image that it can only be used for travel, dining and high-end shops in dense urban areas.
AmEx says that since 2019 its cards are now accepted at 99 percent of the places that Visa and Mastercard are accepted in the US.
Consumer advocates said that eBay's decision to drop AmEx shows the need for Congress to address processing fees, which are sometimes known as 'swipe fees.'
Like other payment processors, AmEx takes a percentage of each transaction a merchant processes on their network
According to non-profit the Merchants Payments Coalition, swipe fees have more than doubled over the past decade, and hit a record $172 billion last year when debit cards and all brands of credit cards are included.
The fees are most merchants' highest operating cost after labor and drive up prices for the average family by more than $1,100 a year, the group said.
'AmEx is just a symptom of the underlying problem,' MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said in a statement on Wednesday.
'Visa and Mastercard each centrally price-fix high swipe fees that are uniformly charged by all banks that issue cards under their brands rather than letting the banks compete for merchants' business.