American Express is ramping up its push into the small business market as the card company rolls out the ninth year of its Shop Small rewards program.
American Express is ramping up its push into the small business market as the card company rolls out the ninth year of its Shop Small rewards program.

AMEX chasing small business market share

American Express is ramping up its push into the small business market as the card company rolls out the ninth year of its Shop Small rewards program.

The payments provider is kicking on from the 50,000 new Australian retail customers it added last year in a bid to grab market share from industry heavyweights Visa and Mastercard.

American Express data shows that, between 2013 and 2020, American Express card members spent more than $6bn in Australian small businesses through the Shop Small program.

The latest push to boost the Shop Small program comes as the card company is dealing with a continued fall in payments processing costs on the back of regulatory pressure.

The two-pronged strategy from American Express is being driven by a widening of the rewards-points program to entice customers to shop in small businesses, coupled with a cut to payments processing costs to lure small businesses to sign on.

American Express vice-president of small and medium enterprises Lisa Belcher said the card company was now offering some of the most competitive costs in the market.

"It's never been more affordable to accept AMEX, the cost gap has closed between VISA and Mastercard," she said.

"We're not always the same price. There is a value with accepting an AMEX card. It's a premium product."

Mrs Belcher said the Shop Small rewards program would be a boon for small businesses given that data revealed AMEX customers were big spenders.

"We're explaining that value to our merchants, which is why the network is growing," she said.

American Express says its users spend on average 1.7 times more than Visa or Mastercard users. Neither total American ­Express user numbers nor the size of its retailer partners are disclosed by the business.

Data published by the Reserve Bank shows big differences in the cost of accepting card payments across Australia.

However, recent reforms by the RBA have seen merchant fees for card payments dropped in recent years, including publishing a schedule of average payment acquisition costs.

This data from the bank shows American Express now sits as the second most expensive card scheme in the country, with an average merchant fee of around 1.4 per cent.

In response to the RBA's move to cut interchange fee benchmarks for debit cards in 2017, American Express and Diners Club have been pushed to cut payments costs.

American Express even acknowledged the cost of fee cuts in its latest annual report, noting the "regulation of bankcard fees had negatively impacted and may continue to negatively impact the discount revenue we earn".

The push by American Express to grow its market share in Australia has been significantly boosted by several deals the company has inked with payment terminal providers Tyro, Square, and Commonwealth Bank.

American Express recently signed a deal with the Franchise Council of Australia which opens the door to accessing thousands of small business franchisees who do not currently offer American Express.

Originally published as AMEX chasing small business market share


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