Having customers view the Visa/Mastercard/Amex "brand" (aka network) in this light is very valuable.
Perks such as cash back, no foreign transaction fees, and miles/points are nice, but they're pretty standard across the different credit tiers of all the major cc providers.
Perhaps having an Amex was once considered prestigious, but speaking for myself and my friends in the mid 20's, credit card providers/payment networks are perceived as largely homogeneous. Nobody cares if you're throwing down an Amex or a Visa to split the Korean BBQ bill. If anything, you'll get a comment of "when are you switching off Amex, their network coverage sucks in Europe".
My friends and I do not view all cards the same. There are obviously "top tier" versions of each card provider, and those are the ones that are looked at with "Prestige"
Whether or not those are Visa, Mastercard, or Amex makes no difference. But if you have a Amex Black, or the metal Chase card with no limit, it does come with opinions.
> Who cares what card you have if you’re paying for your expensive meal through your smartphone’s digital wallet?
Digital payments didn't kill Amex-as-a-status-symbol, the productization and growing availability of credit cards of all brands did. A status symbol brand doesn't send unsolicited junk mail asking for people to sign up for its product.
Just getting the mystical Centurion Card (aka the "Black" Card) requires being personally invited by the company after spending at least $21,000 a month on AmEx cards. They have no credit limit at all, and some people have made multimillion-dollar purchases using them.
To be fair, none of AmEx's charge cards have a limit. But even the Centurion Card will get declined if you try to spend too much, they just don't tell you what "too much" is. I would even bet that the credit limit formulas across all their charge cards are the same and that the inputs are purely customer & purchase specific.
Note that AmEx DOES have credit limits on their credit cards, where the distinction between charge & credit cards is that you "have" to pay off the charge card balance each month (although that isn't even totally true any more).
I guess if I want to make a multi-million dollar purchase I'll have to do some extra admin. That aside every other time I purchase from a retailer they and I get to benefit.
But brand relies to some degree on information asymmetry. As a consumer, you assume that a prestigious brand is somehow better, and to whatever degree your assumption is based on pure speculation, the stronger you buy into that assumption. These days, information is widely available at a moment's lookup. You can compare as never before, across as many scenarios as you like. Interchangeable services, like credit cards, are revealed for what they are. Couple this with the fact that cards are becoming a means to an end, and no longer the physical payment mechanism they once were, and the prestige and mystique of a certain color of plastic fades even faster.
These days, the benefits of holding one card over another can be reduced in seconds to a rough mathematical function. How many vendors accept this card? What are the annual fees? What are the interest rates? What is the expected value of the fringe benefits? Amex pioneered the loyalty card ("affinity card," to use the article's parlance) as a means of locking in better fringe benefits. But now everyone's got a loyalty card, and partners in the travel and retail sectors have deals with almost everyone.
I agree that thinking Amex can be a "status" symbol is foolish unless they really up their marketing budget (after all, anyone could become a lifestyle brand if they tried). More importantly, thats not something consumers care about when picking a credit card.
Anyone know why this is?
With some processors, there's also a monthly fee if you take any AMEX, so it's better to not take it all.
I appreciate it because its good for me as far as consumer protection, but I fully understand smaller businesses not wanting to deal with the added expense/hassle.
The average grocery store has a profit margin of 1% to 3%, from what I understand.
If you live elsewhere in New York State then, yeah, AMEX charges higher fees to merchants so many smaller ones don't want to deal with them.
The vast majority of bars and even most grocery stores in NYC accept AmEx.
FWIW I live in Chicago and rarely find a place that doesn't accept AmEx.
"The Amex people, most of whom had MBAs, sometimes found it amusing to deal with Costco veterans who spoke about starting out stocking warehouse shelves. Less endearing was the habit Costco executives had of referring to Amex as a “vendor.” That made the Amex people seethe. After all, they represented one of America’s oldest corporations. But they smiled and said nothing, and the corporate marriage endured for 16 years."
Seriously?
The first three paragraphs didn't make sense to me and seemed like you said, anecdotal/rumor.
Same with the part about Chenault at the Museum of Natural History event with Sheryl Sandberg and how "yet his dark slacks were creased, and his shoes gleamed as if they'd just been polished." Reads as if the author has something personal in this. What was he supposed to show up in?
I really had no idea. That's really disappointing, how could that be?
But having read the article: good. I'm glad Costco did not hesitate to tell them to take a hike when they found a better deal.
FWIW, AMEX has been doing the hard sell trying to get me to switch to a new card. So far, I haven't seen any offers worth my time. It's a shame really. I've been a cardholder for 15 years and even worked for them for a few years. Personally, I see no reason to continue the "relationship".
1. It has a rock solid dispute system. I've disputed charges where the merchant didn't deliver on promise and AMEX took really good care of it. Same thing with a Visa card didn't go very well. You can do everything off the AMEX website and over email. With others, you have to call them and deal with lousy customer support.
2. They have a really good website and overall user experience. Its a pleasure to go to the website to see the charges, or to get a well laid out annual spending report. Their mobile app is also the best as compared to others.
3. They have stellar customer service. I rarely need to call them, but when I do, the wait times are in seconds.
4. They support mobile payments - Its the first one to be on Samsung Pay and I happen to have a Note 5.
FWIW, I just have the "American Express Blue Cashback" card, which no annual fees.
I agree with the overall sentiment of your post, but unlike Amex, Visa does not issue credit cards, and relies on banks ("Issuing Banks") to deal with disputes. So if you had a bad experience with your Visa card, you should consider switching to a different issuer, vs. just assuming that all banks that issue Visa cards will act the same.
Let me also note that since Amex has become a commercial bank, they offer a FDIC insured savings account[1] at an extremely competitive .9% APY. That was the highest I could find a couple years ago when I started looking. That product too, to me, feels very premium.
Ironically, I think the people who would stand to benefit the most from a charge card, those just getting started i.e. in college, probably don't qualify for a charge-only AMEX, whereas the credit card companies aggressively pray on them.
However, Costco is right AMEX is just a vendor and if they can find cheaper or better vendor with benefits then more power to them.
Their network is small and getting smaller, and I think soon corporations will just stop issuing AMEX to its employees for corp expenses (this were AMEX is still strong (guessing)) -- as there are enough attractive business-friendly alternatives are out there.
