(Bloomberg) — EBay Inc. will drop American Express Co. cards as a payment option on the online marketplace because of “unacceptably high fees,” according to an email reviewed by Bloomberg News that the company plans to send to customers.
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EBay plans to notify customers this week about the change, which is set to take effect Aug. 17.
“After careful consideration, eBay has decided to no longer accept American Express globally effective August 17 due to the unacceptably high fees American Express charges for processing credit card transactions,” the email states.
The two companies have been embroiled in negotiations around the merchant discount rates — also known as interchange fees — charged by Amex at the point of sale. The fees, charged each time a card is used in a transaction by the respective payments network, have long been a headache for merchants. One trade group said retailers paid more than $172 billion in card-processing fees last year.
Amex, however, said its research shows that its fees are comparable to what eBay must pay to accept similar cards on other networks, like Visa Inc. and Mastercard Inc., while providing more value.
“American Express Card Members have an average transaction size at eBay that is more than double the transaction size of cards from other networks,” New York-based Amex said in a statement. “We find eBay’s decision to drop American Express as a payment choice for consumers to be inconsistent with their stated desire to increase competition at the point of sale.”
Competitors of eBay — including Amazon.com Inc. — have made similar moves while at the bargaining table over the transaction fees. Amazon threatened to pull all Visa cards from being accepted on its global network before finally striking a deal and abandoning the bluff. Amex has also lost deals, like its once-exclusive pact with Costco Wholesale Corp., over its terms.
EBay has lost significant market share to other e-commerce giants like Amazon and Walmart Inc. in recent years, and last month provided a weaker-than-anticipated earnings outlook for the current quarter. Globally, shoppers will spend $73.4 billion on the marketplace this year, according to average analyst estimates compiled by Bloomberg.
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