Is eBay’s Decision to Drop AmEx a Ploy To Negotiate Lower Acceptance Costs?

EBay Inc.’s decision to stop accepting American Express cards effective Aug. 17 is generating big headlines, but some payments-industry experts question whether the decision is really a tactic to negotiate a lower interchange rate from the travel-and-entertainment card giant, given that eBay says it won’t stop accepting AmEx for about 10 weeks.

“It’s no secret AmEx is bloody expensive to accept compared to Visa and Mastercard, but if a merchant is going to stop accepting a card, why wait so long to do it?” says Cliff Gray, principal at Gray Consulting Ventures LLC. “It will be interesting to see how this plays out.”

Further compounding the question of AmEx’s high acceptance costs is that AmEx’s market share pales in comparison to that of Visa and Mastercard. That makes it harder for merchants to justify AmEx’s high cost of acceptance, Gray adds.

“AmEx was launched to service business travelers, not the average consumer,” Gray says. “While merchants may have customers that want to pay with it, the question is do they have enough customers wanting to pay with AmEx to justify the acceptance cost?”

EBay says in an emailed statement the decision to drop AmEx is due to its “unacceptably high fees.”

“At a time when payment-processing costs should be declining because of technological advancements, investments in fraud capabilities, and customer protections by merchants like eBay, credit card transaction fees continue to rise unabated because of a lack of meaningful competition,” eBay says. 

EBay says its customers have been notified AmEx will no longer be accepted as of Aug. 17 so users who typically make purchases using AmEx will have ample time to transition to other payment methods.

“Based on internal research, we know that the vast majority of eBay customers are willing to use alternative payment options to continue enjoying buying and selling on our marketplace,” eBay says.

EBay’s move to drop AmEx is also seen by merchant advocates as an indication that sellers are increasingly put off by what they view as the high cost of card acceptance, which is typically measured by the interchange rate, or the percentage of the sale paid by merchants to processors.

“Whether it is a small merchant tacking on a surcharge to cover card-acceptance costs or a move to stop accepting a card, there is no question merchants of all sizes are fed up with the high cost of interchange,” says Doug Kantor, an MPC executive committee member and general counsel for the National Association of Convenience Stores.

In a statement posted on its Web site, AmEx says that while it’s disappointed by eBay’s decision, internal research indicates the cost of acceptance for AmEx cards in the United States is comparable to what eBay pays for similar cards on other networks. “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,” AmEx says in the statement.

EBay represents less than 0.2% of AmEx’s volume, the card network says.

One of the largest e-commerce merchants, eBay posted gross merchandise volume of $18.6 billion, during the first quarter of 2024, up 1% from the same period a year earlier. Revenues for the same period totaled $2.6 billion, up 2% from a year ago. EBay has 132 million active buyers worldwide.

By comparison, e-commerce giant Amazon.com, posted total sales of $143.3 billion during the first quarter, up 13% from the same period a year ago. Of that amount, sales in North America totaled $86.3 billion for the quarter, up 12% from a year ago.