eBay Inc. will no longer use American Express as a payment option due to “unacceptably high fees,” according to a statement from the online marketplace.
eBay notified customers of the change on Wednesday, which will take effect on August 17.
“After careful consideration, eBay has decided to no longer accept American Express cards globally effective August 17 due to the unacceptably high fees charged by American Express to process credit card transactions,” the company said in a statement.
The two companies have been negotiating over the merchant discount rate, also known as an interchange fee, that American Express charges at the point of sale. Fees levied every time a card is used for a transaction have been a headache for merchants. Retailers paid more than $172 billion in card processing fees last year, a trade group said.
However, American Express said its research shows its fees are comparable to what eBay pays to accept similar cards on other networks, such as Visa Inc. and Mastercard Inc., while providing more value.
“The average transaction size for American Express card members on eBay is more than twice the size of other online card transactions,” New York-based American Express said in a statement. “We are aware of eBay’s decision to no longer treat American Express cards as consumers’ payment choices, which is inconsistent with their stated desire to increase competition at the point of sale.”
eBay’s rivals – including Amazon.com Inc – have made similar moves in haggling over transaction fees. Amazon threatened to stop accepting all Visa cards on its global network before finally reaching a deal. American Express has also lost some deals over terms, including an exclusive agreement with Costco Wholesale Corp.
“Ultimately, we agree with AXP’s position as the company is priced in line with its value, and if AXP makes sacrifices on price,” Keefe, Bruyette & Woods Inc. analysts Sanjay Sakhrani, Steven Kwok and Vasundhara Govil said in a note, , then the company’s stock price will decline. “Recall that this was an important reason for AXP to withdraw from its partnership with Costco in the past. “
American Express said eBay accounts for less than 0.2% of its network.
eBay has lost significant market share to other e-commerce giants such as Amazon and Walmart in recent years and last month reported a weaker-than-expected profit outlook for the current quarter. Global shoppers will spend $73.4 billion in the market this year, according to an average analyst estimate compiled by Bloomberg.
