Starting August 17, eBay will stop accepting Amex payments due to concerns about inflation and the increasing financial pressures on consumers and small businesses. eBay argues that tighter regulation is needed to encourage competition among credit card networks and decrease the costs associated with processing transactions for buyers and sellers.
The company also noted that most of its users are open to using other payment methods. eBay attributes this change to the high fees American Express charges for credit card transactions. Despite technological improvements and eBay’s investments in fraud prevention and customer security, the costs of processing credit card payments continue to rise, a trend eBay attributes to insufficient competition in the market.
Key Takeaways
- High Transaction Fees Drive Policy Change: eBay’s decision to stop accepting American Express cards for direct payments stems from the high fees associated with these transactions. The company argues that limited competition in the credit card sector contributes to these increasing costs and advocates for stricter regulations to promote competition and reduce fees.
- Alternative Payment Methods Remain Available: Despite discontinuing American Express, eBay will still accept other major credit cards like Visa, Mastercard, and Discover, along with digital payment methods such as Apple Pay, PayPal, Venmo, and Google Pay. Research indicates that most eBay customers are open to using these alternative payment options.
- Impact on Consumers and Small Businesses: eBay has highlighted concerns about the effects of inflation and rising costs on consumers and small businesses. The company believes that encouraging competition among credit card networks through stricter regulations can help reduce transaction costs, benefiting both merchants and customers.
- Context of Broader Industry Trends: eBay’s move mirrors broader industry trends where online retailers are challenging payment processors over high transaction fees. Similar actions have been seen with other major retailers, such as Amazon’s previous confrontation with Visa. Additionally, eBay’s decision follows a precedent set by Costco Wholesale Corp., which ended its partnership with American Express in favor of Visa in 2016.
eBay Will Stop Accepting Amex Payments Due to High Fees
eBay has decided to stop accepting American Express cards for direct payments, citing excessively high fees. This decision highlights a widespread problem with increasing credit card transaction fees attributed to limited competition in the sector. eBay has pointed out that unchecked transaction fee rises result from this insufficient competition. The company suggests that stricter regulations encourage more competition among credit card networks, potentially reducing the costs of processing transactions.
eBay will still accept Visa, Mastercard, and Discover, and digital payment methods like Apple Pay, PayPal, Venmo, and Google Pay. Despite technological improvements and enhanced fraud prevention and customer protection measures by companies like eBay, credit card transaction fees remain high due to limited competition.
The company’s statement expressed concerns about inflation and rising costs affecting consumers and small businesses, emphasizing stricter regulations to encourage competition among credit card networks and reduce transaction costs for merchants and customers.
eBay is informing its customers about the upcoming changes to ensure they are ready for a smooth transition starting August 17. The company has a range of widely used and secure payment options on its platform. Research indicates that most eBay customers are open to using alternative payment methods to continue their transactions on the marketplace.
American Express has long been a payment option for eBay customers. In response to eBay’s recent decision, American Express expressed disappointment, stating that this move would restrict payment options for consumers and deprive them of the benefits, security, and rewards associated with using their cards.
According to their research, American Express also mentioned that the costs associated with accepting their card in the US are on par with the fees eBay incurs for comparable cards from other networks. They argued that eBay’s choice to eliminate American Express as a payment option contradicts their declared aim to enhance competition at the point of sale.
Recently, online retailers have grown more aggressive with payment processors regarding the fees charged for accepting payments. A notable example occurred about two years ago in the U.K., where Amazon threatened to stop accepting Visa due to what it described as excessive fees. Ultimately, both settled their dispute without any interruption in service.
Similar to other payment processors, American Express collects a percentage of each transaction processed through its network. The specific fee depends on the industry, and the rates paid by the largest merchants are generally kept confidential.
The two companies, AmEx and eBay, have been discussing merchant discount rates, also known as interchange fees. These fees are applied every time a card is used in a transaction and have consistently caused concern for merchants. If recent reports are to be believed, retailers paid over $172 billion in card-processing fees last year.
Confident about the decision, eBay stated that its internal research indicates a strong willingness among the majority of its customers to use alternative payment options to keep buying and selling on its platform.
Also, eBay is not alone in ceasing to accept American Express cards. Costco Wholesale Corp. also terminated its credit card partnership with American Express in 2016 after approximately 16 years. This transition shifted Costco to Visa’s credit card network and replaced their co-branded American Express cards with Visa cards issued by Citigroup.
Presently, eBay hosts 2 billion listings and has 132 million active buyers globally, connecting buyers and sellers across 190 markets. This network supports small business expansion and generates economic opportunities for various communities.
About eBay
eBay Inc. and its subsidiaries manage online marketplace platforms that link buyers and sellers across the United States, Germany, China, the United Kingdom, and other international locations. These platforms facilitate the listing, selling, and purchasing of various products. Established in 1995, the company is based in San Jose, California. eBay operates through several platforms, including the Marketplace, StubHub, and Classifieds.
The Marketplace platform consists of the website www.ebay.com, its localized versions, and mobile applications. The StubHub platform offers ticket sales service on www.stubhub.com, along with its regional versions and associated mobile applications. The Classifieds platform oversees a collection of brands like mobile.de, Kijiji, Gumtree, Marktplaats, eBay Kleinanzeigen, and more.
About American Express
American Express Co. provides charge and credit card products and travel-related services. It is structured into several segments: Global Commercial Services, Global Consumer Services Group, Corporate, and Global Merchant and Network Services, among others. The Global Consumer Services Group segment offers a variety of proprietary consumer cards worldwide.
The Global Commercial Services division provides proprietary cards for small businesses and corporations, as well as services related to expense management, payment management, and commercial financing products. The Global Merchant and Network Services division oversees a global payments network that processes card transactions, works with merchants, and provides marketing programs, services, and data analytics. The Corporate & Other division encompasses corporate functions and various other businesses and operations. Founded on March 28, 1850, by William G. Fargo, Henry Wells, and John Warren Butterfield, AmEx is headquartered in New York, NY.
Conclusion
eBay’s decision to cease accepting American Express cards starting August 17 addresses the high fees and chargebacks imposed by AmEx and the broader issue of increasing credit card transaction fees due to limited competition. The company advocates for stricter regulations to foster competition and reduce costs for both merchants and consumers. eBay reassures its users that alternative payment methods such as Visa, Mastercard, Discover, and various digital payment options will still be available.
This move aligns with industry trends of retailers challenging high processing fees and mirrors similar actions by companies like Costco. While American Express expressed disappointment, eBay remains confident that its customers will adapt to the new payment options, ensuring continued transactions on the platform.
