According to a press release from online marketplace eBay Inc., the corporate will remove American Express Co.’s bank card as a payment option since the fees are “unacceptably high.”
eBay informed its customers on Wednesday concerning the change, which is able to take effect on August 17.
“After careful consideration, eBay has decided to stop accepting American Express worldwide as of August 17, due to American Express’s unacceptably high fees for processing credit card transactions,” the corporate said in a opinion.
The two corporations are locked in negotiations over the merchant discounts – also referred to as interchange fees – that Amex charges at point of sale. The fees, that are charged on every card payment, have long been a headache for merchants. One trade group said retailers paid greater than 172 billion US dollars in card processing fees last 12 months.
However, Amex said research showed the fees were comparable to those eBay needed to pay to just accept similar cards on other networks similar to Visa Inc. and Mastercard Inc., and that the corporate was offering higher value.
“The average transaction size of American Express cardholders on eBay is more than twice that of cards from other networks,” New York-based Amex said in a press release. “We find that eBay’s decision to remove American Express as a payment option for consumers is inconsistent with its stated desire to increase competition at the point of sale.”
eBay’s competitors – including Amazon.com Inc. – have taken similar steps in negotiating transaction fees. Amazon threatened to stop accepting all Visa cards in its worldwide network before close a deal. Amex also has lost dealsincluding the once exclusive contract with Costco Wholesale Corp., on its terms.
“Ultimately, we agree with AXP’s stance as the company prices based on value, and it would be a slippery slope if AXP were to cut corners on price,” Keefe, Bruyette & Woods Inc. analysts Sanjay Sakhrani, Steven Kwok and Vasundhara Govil said in a note, calling the corporate by its ticker symbol. “Remember, this has been a key reason for AXP to exit the Costco relationship in the past.”
According to Amex, eBay accounts for lower than 0.2 percent of its total network volume.
eBay has lost significant market share to other e-commerce giants similar to Amazon and Walmart Inc. in recent times and delivered weaker-than-expected earnings last month. Earnings outlook for the present quarter. Global shoppers will spend $73.4 billion on the marketplace this 12 months, in accordance with average analyst estimates compiled by Bloomberg.
