American Express Trims Discount Rates

The financial firm wants more retailers to accept payment with its cards.
March 14, 2018

NEW YORK CITY – American Express Co. said it will slash its worldwide discount rate possibly up to three times the level previously announced for this year, Digital Transactions reports. The move comes as AmEx seeks to widen its network of merchants in the United States and overseas.

The discounts will be the largest proposed by AmEx in two decades, and could cost the financial firm up to $585 million in 2018. Earlier, the company had said the average discount would drop 0.02 to 0.03 percentage points for 2018.

Driving the reductions would be individually negotiated rates in nations with unregulated acceptance costs. Its average worldwide discount rate last year was 2.43%, down from 2.45% in 2016. “We’re making some conscious trade-offs in the discount rate as we continue our focus on growing merchant coverage,” said Stephen Squeri, AmEx chairman and CEO during a March Investor Day. “The result, more places for our cardmembers to use our products, which means more revenues from both spending and lending.”

For years, the company has sought to close the gap between the number of its merchants and that of MasterCard and Visa, which collectively have around 10 million locations across the world.