Do you care how you pay for things?

Payment options are proliferating beyond the usual cash, checks, and credit/debit cards. I used PayPal in a face-to-face transaction to buy a couple of books recently, and I use Google Checkout online to shelter my e-mail address. In my typical shopping, I don’t really care if a business takes American Express, even though I personally have three American Express cards at the moment. (I needed some Hilton points.)

The view from the other side is that over 95% of my customers who pay by credit card use Visa or MasterCard, and only a tiny fraction use American Express. Yet American Express tries to convince merchants that not only will their customers want to use their AmEx cards, but that a high percentage of AmEx cardholders don’t have any other credit cards. It’s certainly possible that American Express is lying, but what if they’re telling the truth? Are there really people out there with an American Express card and nothing else?

I suspect that American Express is just desperately trying to stay relevant. Competition forced AmEx to start offering credit cards rather than charge cards that had to be paid in full every month, and then AmEx had to strike deals for affinity cards such as the Delta SkyMiles card, and then AmEx had to start letting other banks issue American Express cards in a rare example of vertical disintegration. On the merchant side, the American Express merchant agreement is full of language tying the terms to the Visa and MasterCard terms and preventing merchants from discriminating against American Express. That’s not the usual approach for a company confident in its value proposition.

I’m trying to decide whether to continue accepting American Express credit cards for my business after their 34% increase in processing fees last month. Will the few customers who would pay with American Express really care if they have to use a different payment method? Could my business actually appear more contemporary if we switched over to accepting nothing but PayPal? When I first opened my credit card merchant account in 1994, accepting credit cards was a vital component of presenting the image of an established business. Now my business is part of the establishment, and I’m no longer sure that’s what customers are looking for.