By Patrick Avenell
Retailers in the appliance and consumer electronics industries should stop accepting American Express (Amex) and Diners Club credit cards and focus only on Visa and Mastercard, according to Visa Australia country manager Vipin Kalra.
In an extraordinarily frank interview for the boss of the leading brand in what is traditionally a conservative industry, Kalra hit out at American Express, in particular, for charging service fees and taking too long to settle payments with its merchant partners.
Vipin Kalra quoted Reserve Bank of Australia (RBA) research that found American Express service fees on retail transactions were "twice as high as those on Visa". Furthermore, this researched claimed that 54 per cent of retailers were unaware how much money they were paying in service fees. Rectifying this ignorance is central to Visa's anti-Amex campaign.
"If you don't know how much you're paying you don't know how to find efficiencies in the system," said Kalra.
"One in three businesses claim they are suffering due to Amex's service fees and despite paying double the fee, the merchants don't get the money right away: there's a cost issue but there's also a speed issue as well."
Central to Kalra's argument is the contrasting business models of Visa and American Express. Kalra described Visa as a "payments network company" that links banks and retail customers with retailers.
For the purpose of its new marketing strategy to drive a wedge between retailers and American Express, Visa is framing Amex as a company that deals directly with retailers, forming close relationships forged through successful marketing campaigns, and then screwing them on service fees and delayed payments.
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Heretofore, Visa has not sought to have direct contact with either card holders or retailers, though it is currently re-evaluating this position.
"Our job is to connect consumers, merchants and financial institutions," said Kalra. "We connect the banks that issue the cards and service the merchants. That's the difference between Visa and Amex: Amex deals directly with the merchants.
"We have boosted our team and we now have many more people in Australia to work with merchants, because the merchants don't hear from us directly."
Kalra said the major stumbling block to retailers rejecting American Express cards at the point of purchase was the belief it mean the loss of a sale. He told Current.com.au that this was a fallacy, as consumers might want to use their Amex for the rewards points, but they would undoubtedly have either a Visa or a Mastercard with them to complete the transaction.
"Merchants don't see any loss of business from not accepting American Express as consumers are happy to pull out a different brand of credit card," said Kalra.
"This campaign we are launching is just the beginning of the program. We will be continuing to educate merchants and consumers to 'why pay more for less value?'.
"Don't just believe us because we say we are better value – listen to your peers – you can save money in your business by not accepting American Express, without losing any customers."
Visa will be showcasing its anti-Amex campaign at retail trade shows in Sydney and Melbourne later this year.