America Express (NYSE: AXP) is offering merchants incentives up to $450,000 to begin accepting its credit cards. The company moved forward with the initiative to keep up with Visa (NYSE: V) and Mastercard (NYSE:MA).
AmEx has been behind the curve for gathering the attention of American business. In 2018, both Visa and Mastercard were accepted in 1.3 million more places in the U.S. than American Express. American Express has added three million businesses through third party payment processors and its salespeople gave sign on bonuses to 133 businesses.
Merchant acceptance has plagued American Express for decades due to its focus on wealthy customers rather than the mass market. When big banks on the Visa and Mastercard networks introduced rewards cards, American Express big spenders began using other cards.
Small businesses now have become the prime focus for the company, especially those who have avoided American Express for their previous high fees. Rates are now similar across the board for all three leading card companies.
"[American Express] made a business decision to provide targeted sign-on incentives to strategic, priority holdout merchants, which comprise a tiny fraction of a percent of the merchants we acquire in a year," Anré Williams, head of AmEx's global merchant and network services said.
American Express cleared salespeople to pay bonuses up to $10,000 to businesses it expects to generate less than $3 million in annual charges. The figure is now doubled to $20,000 regardless of merchant size. A regional vice president can approve sign on bonuses up to $100,000.
Visa and Mastercard have ended the last eight years in positive territory with double digit share gains. American Express has had years with double digit losses for shares within the last decade. This move may bode well for the card as it tries to rebrand to support a new user base.
American Express expects to catch up to its competitors by the end of this year.