walkitout (walkitout) wrote,

Bloomberg article about AmEx woes

You may have noticed that Costco affiliate cards are no longer American Express. Is there a story? Yes! There is a story.

Here is one version of the story:


In this version, Costco Canada switched cards and the world didn't end, so Costco US put the card out for bid and they chose someone other than AmEx. There may have been some differences prior to that event. Turns out, a _lot_ of AmEx's business is affiliate cards. Enough so some AmEx shareholders, once they became aware of that fact, got very Unhappy and took action against AmEx for failing to proactively share that information.

You may or may not be aware of all the differences between American Express and Other Payment Cards -- they are legion, and they depend on which AmEx card you are comparing to which Other Payment Card. But there are some highlights, notably, AmEx doesn't make money off of charging you a boat load of interest to let you owe them money for months at a time, but rather by charging a higher fee at the time the card is used to actually purchase something (<-- this is what is known as a massive oversimplification). As you can imagine, In Our World of DisIntermediation and Driving Costs Down to Zero and Commodifying the Fuck Out Of Everything, this business model is problematic.

During my first marriage, I believe my husband had an AmEx card. I hated those fuckers, because you'd try to use them somewhere, like at a restaurant, and even if they ultimately took the card, they'd drag their heels and act like you had just taken a dump under your dining table. It was embarrassing. (Also, apparently, in violation of their agreement with AmEx, but legal!) Give me cash or a Visa any day. I am, therefore, exactly the wrong person to make any sense of AmEx having woes, because (a) Yay! They are FINALLY being treated as they deserve! and (b) I never did understand why anyone used them in the first place. YMMV, and of course the people who like AmEx always had a good word about a bunch of perks that I never saw any value in (also, again, I'm the person who has Issues with Perks who tends to view Perks as distorting decision making).

AmEx has been around so long, and has switched businesses successfully on more than one occasion (delivering packages, traveler's checks, payment cards, being the big ones). I therefore think it would be unwise to Predict the End of American Express any time soon. (Also, Don't Bet Against Buffet. You'll be right, but it'll take decades to find that out, and in the meantime, that man will make more billions off of being In the Wrong.) I mean, seriously, I still shop at Kmart once in a while, and I bet some of my readers were under the impression that Kmart went out of business long ago. Instead, I must await further developments.
Tags: our future economy today

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