eBay, the online marketplace giant, has announced its decision to stop accepting American Express as a payment method starting Aug. 17.
The company cites “unacceptably high fees” charged by American Express for processing credit card transactions as the main reason for this move. eBay also stated that its customers have access to other payment options for online shopping.
This decision is a significant setback for American Express, as its customers are often considered the most desirable by merchants due to their high spending habits. However, this is not the first time that merchants have expressed their dissatisfaction with AmEx’s business practices by ending partnerships, with the most notable example being the warehouse chain Costco nearly a decade ago.
Scott Overland, an eBay spokesman, explained that eBay customers have become increasingly aware of new payment methods, making the payments landscape more competitive than ever before. As a result, AmEx is no longer seen as an essential partner for eBay. The online marketplace has been offering customers alternative payment options, such as buy now, pay later services through Apple Pay, PayPal, and other companies like Klarna and Affirm.
Overland emphasized that the majority of eBay customers are willing to use these alternative payment options to continue enjoying the buying and selling experience on the platform.
In recent years, online merchants have become more aggressive in their negotiations with payment processors over the fees they charge for accepting payments. For example, Amazon had a similar dispute with Visa in the U.K. about two years ago, threatening to drop Visa as a payment option due to what it also deemed as high fees. However, Visa and Amazon eventually resolved their differences without any disruption of service.
Like other payment processors, American Express charges a percentage of each transaction processed on their network. The fee varies by industry, and the rates that the largest merchants pay are typically kept confidential.
In response to eBay’s decision, American Express stated that the cost for eBay to accept AmEx cards is “comparable to what eBay pays for similar cards on other networks” and highlighted that AmEx cardmembers typically spend twice as much as those using other networks.
Adam Isserlis, a spokesman for AmEx, expressed the company’s disappointment, saying, “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.”
As eBay moves forward without American Express, it remains to be seen how this decision will impact both companies and whether it will set a precedent for other merchants to follow suit in the ongoing battle over payment processing fees.