American Express Co. is turning to some unusual allies in its quest to gain popularity overseas: shoe-repair shops and bargain stores.
(Bloomberg) — American Express Co. is turning to some unusual allies in its quest to gain popularity overseas: shoe-repair shops and bargain stores.
After courting five-star hotels, international airlines and luxury tourist destinations all over the world, Amex is now looking downmarket in its mission to abolish the question: “Do you accept American Express?” The effort comes four years after the company was able to claim its cards are accepted at just as many US locations as Visa Inc. and Mastercard Inc.
“Our origins are primarily around travel and entertainment, and what we recognized is our card members wanted to use their cards far more places,” Raymond Joabar, group president of Amex’s global merchant and network-services division, said in an interview with Bloomberg Television Wednesday. “We needed to move into everyday spend categories — a lot of smaller shops and retail.”
The credit-card giant has already tripled the number of places where it’s accepted to more than 80 million in the past five years, after partnering with some of the world’s largest fintechs. For instance, Joabar said the firm will work with Fidelity National Information Services Inc.’s Worldpay to improve acceptance of its cards in the UK.
The quest for parity coverage has led Amex staffers to some unexpected places. Take Dan Edelman, Amex’s head client manager for merchants in the UK. In recent months, Edelman has signed up companies from Timpson Ltd., which offers key cutting and shoe repairs in thousands of shops, to B&M Retail Ltd., which operates 700 bargain stores.
“There’s very expensive cars in the car park,” Edelman said of B&M’s locations. “And our customers really wanted to spend in their stores.”
The push is a crucial part of expanding Amex’s international business, which now accounts for about a fifth of revenue. The company has been vocal in recent months about how far it has to go to achieve the same kind of scale it has in the US.
“For those of you that spend time outside the US, we still have an opportunity to improve acceptance outside the United States,” Doug Buckminster, an Amex vice chairman, told investors in May. “We’re very focused on that.”
For Amex the problem is twofold: First, US cardholders are less likely to use their cards when they travel if they fear they won’t be accepted everywhere they try. Beyond that, more than 40% of the company’s cards are issued by other banks, including a bevy of overseas firms, that want to ensure their customers don’t get turned down.
To solve the problem, Amex identified four dozen “priority cities” — metropolitan areas around the world where it has higher concentrations of local issuance and sees a regular influx of US cardholders as tourists. Then it deployed hundreds of local staffers to the biggest merchants in those cities, who set out to persuade them to accept American Express. The teams survey customers and use the firm’s vast trove of spending data to determine which merchants to target.
“We look at huge amounts of data on where customers live and where they spend,” Edelman said. “There’s a huge amount of science and data around where we focus. It’s not every post code in London. We focus on certain areas in London where we know our customers are.”
Fintech Links
Separately, Amex has been inking deals with financial-technology firms including Adyen NV, Stripe Inc. and Block Inc.’s Square, agreements that mean the legions of small merchants that are clients of those fintechs can now also accept Amex cards.
The overseas effort actually got started in 2017, and staffers were quietly at work during the pandemic-induced lockdowns in recent years cajoling merchants to begin accepting the firm’s cards. Now, Amex is hoping that consumers freed from those lockdowns will notice the difference.
At the start of the program, Amex’s cards were accepted at more than 75% of merchant locations in just six of the priority cities. Now roughly 23 cities have surpassed that level, and the company expects to have more than 30 at that mark by the end of the year.
“That gives card members far more confidence to pull out their card,” Joabar said. “Internationally, we wanted to make sure we were in the places our card members live, work and travel to.”
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