American Express is cutting the fees it charges small businesses by up to 1 percentage point under an aggressive expansion plan aimed at doubling its Australian footprint in two years.
As it navigates major shifts in the payment landscape and competition with other providers, the credit card giant is eyeing its biggest roll-out in Australia since it arrived here in 1954.
The move is aimed at getting more small businesses to accept Amex payments, which typically cost business owners more, leading many shops to impose higher credit card surcharges on Amex payments or to not accept them at all.
Katrina Konstas, who looks after the small merchants' business at American Express, said the credit card giant wanted to double the number of Australian small businesses that accepted Amex in the next two years.
Ms Konstas said there were several hundred thousand merchants that took Amex payments today, most of them small businesses, and the company was eyeing growth by lowering fees and through partnerships with other businesses including banks.
"We want to make it a lot easier for merchants to accept American Express," she said. "For some businesses, it will be a reduction of a whole percentage point."
According to the Reserve Bank, Amex charges average merchant service fees of 1.58 per cent of a transaction's value, compared with 0.78 per cent for MasterCard and Visa, and 1.8 per for Diners Club.
But the cost for a small business can be greater than this, because large retailers such as supermarkets are charged lower fees for accepting Amex cards.
Amex says the fee reductions will vary, but most of its small merchants will pay rates of less than 2 per cent for accepting Amex payments by the end of this year.
As part of the plan, the credit card firm has recently signed a deal with the Commonwealth Bank that will allow small businesses to accept Amex for the same price as taking MasterCard or Visa payments, up to a certain amount of turnover.
That compares with the current situation where many small businesses typically have separate pricing packages with Amex.
CBA's executive general manager of business banking, Claire Roberts, said the plan would allow small businesses to easily broaden the range of cards they accepted.
"Consumers want flexibility in the way they pay for goods and services and by adding American Express we are now providing small businesses with card payment options at the same rate," she said in a statement.
Amex has similar deals in place with payment system providers Tyro Payments and Square.
Ms Konstas said it viewed small businesses as those with an annual turnover of less than $10 million.
"They are the grocer, they are the cafe, they are the small retailer," Ms Konstas said.
RBA figures show that the number of American Express and Diners Club purchases combined has fallen from about 15 per cent of the total credit and charge card market at the start of this decade to 13.6 per cent more recently.
The change comes after banks have recently cut the value of the loyalty schemes attached to bank-issued Amex cards in response to regulations designed to lower payment costs. Cards directly issued by Amex are not affected by these changes.