Hard To Feel Too Bad About This Downsizing

American Express announced today of their intention to reduce their work force by 10%, shedding 7000 jobs over the next year.  It’s rarely good to hear about job cuts, and the current downturn in our economy is impacting everybody.

Still, a company as unresponsive and unconcerned about their merchant members as Amex probably needs to trim way back. After all, their 2007 profits were only $3.7 billion!

Maybe those whose jobs survive will show a little more interest in providing good customer service.

You may not be aware that when you place an order at goodbuyguys.com and pay with your American Express card, Amex takes almost 3% of the transaction off the top before they pay the merchant you made the purchase from.  This is a fee they earn in addition to any interest you may pay in carrying a balance from month to month.

While the merchant does get fairly quick payment (4-5 days), the impact of losing a 3% fee has a serious effect on what you pay.  It has to be reflected in the price.

If you have a rewards card that gives you a cash rebate, that rebate comes from the merchant, not from Amex.  Again, if the credit card company is going to give you money back, the merchant you made  your purchase from must factor that rebate into the price of what you purchase.

In exchange for these fees (American Express merchant fees are higher than both Mastercard and Visa) AMEX consistently makes things as complicated as they possibly can for the merchant, making their fee structure almost impossible to interpret.

If you challenge a charge on your card (even if it is valid) AMEX can charge the merchant as much as $20.00 in something called a “chargeback” fee for the merchant to prove the charge is valid, even if they have done nothing wrong.

American Express’s new initiative to cut employee jobs is intended to save the company $1.8 billion dollars in costs in 2009.

Think any of that savings will be passed on to the merchants that keep the company alive?  Don’t count on it!

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