It nice to read about a merchant standing up to American Express and winning. American Express is notorious for charging merchants who accept its credit card ridiculously high fees, far higher than what MasterCard and Visa charge.
SYDNEY — The Merivale Group, Sydney’s largest operator of upscale restaurants and bars, sees itself as the company that fought American Express and won.
American Express has a different version.
With nine of this city’s most fashionable restaurants and 40 bars, Merivale draws Sydney’s biggest spenders, who often want to pay with corporate or personal credit cards to earn perks like frequent-flier miles and other rewards. But many are unaware that each swipe requires Merivale to pay banks or credit card companies a fee — one that the restaurant and other retailers had long argued was too high.
Thanks to changes in credit card rules imposed by Australia’s central bank, by last year the merchant fees that Merivale pays Visa and MasterCard per transaction had been slashed by more than half, to 0.74 percent of each transaction. But American Express, which is not subject to the regulations because its credit card transactions initially did not go through a bank, was still charging 2.81 percent early last year, said Brett Sergeant, Merivale’s general manager.
Credit card fees were a big expense for the chain, equal to a tenth of its annual profit target, he added.
When American Express refused to lower its fee, Merivale responded by charging diners who paid with that card an extra 2.75 percent of their total bill, while letting users of Visa and MasterCard escape the surcharge. A handful of clients complained, but most customers simply reached into their wallet and paid with a Visa or MasterCard instead, Mr. Sergeant said.
American Express disagreed, saying its corporate customers in particular were unhappy about the restaurant’s surcharge policy. American Express started steering its cardholders to rival establishments that had not imposed surcharges.
