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The art of hypocrisy

Amex Apple PayI readily admit that I am getting older and grumpier. Mea Culpa. But sometimes you just have to get some opinions off your chest, if only for your own mental wellbeing. The recent announcement by American Express of its support for the Surcharge Free movement is one such moment. How a company that is one of the most blatant gougers of interchange fees at point of sale can seriously believe that retailers don’t see this for what it is staggers me.

American Express has been levying an amount often in excess of 40 per cent of the average retailer’s EBIT for an electronic transaction that technically costs them next to nothing, should already be covered in the high level of card fees they charge their own customers, and is not negotiable to the retailer. They are one of the serial offenders that are being targeted in the current call for a banking fee review.

I have been a chief marketing officer in a bank. I get the revenue model and what drives it. But there are two points that need to be made here. One is fairness, and the other is openness. American Express appears to argue for neither. It wants to charge excessive fees and bury them by forcing retailers to absorb them, and not make a negative public relations impact for their brand or revenue model.

Is it any wonder that so many retailers have taken the decision not to honour American Express card purchases at all, let alone ask for a levy to recover the cost?

This whole interchange issue is a massive problem as we head further towards a cash-less society and closer to a technologically driven ‘virtual money’ exchange. Retailers are being squeezed at every point of the value chain and physical retail is the one that is copping the most pressure for costs. If it isn’t landlords, it’s labour costs. If it isn’t margins, it’s bank fees.

But at least most of the players are big enough and tough enough to argue their case in the light of public scrutiny. American Express wants retailers to absorb their exorbitant imposts in the shadows and to just put up with it and go quietly. I have long been a supporter of a customer’s right to choose their payment method – as many of my clients will attest to. But that was on the basis that the customer understood that their choices had a consequence – and one that in some instances required them to pay for it. Customer backlash and competitive context are what keeps fees and prices under control, after all.

I still – as a long-time American Express cardholder – support the idea that a customer should be able to use their card of choice or payment method of choice, as long as the retailer has the right to recover it. If that level of fairness does not prevail, more retailers will face the prospect of being forced to decline cards such as American Express or go out of business. That is how tight margins are for many retailers today.

If you want to charge the fees, you better be brave enough to support them to the very people who justify your revenue model.

Peter James Ryan is head of Red Communication and can be contacted on (02) 9481 7215 or at

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