American Express fees rile catalog companies

May 29, 1991|By American Banker

NEW YORK -- American Express Co., still reeling from a revolt by restaurateurs over its card fees, is now facing dissension from another big merchant group.

Catalog companies are grousing that the fees they pay American Express on card transactions are too high.

"There is a discrepancy between the cost of taking American Express and other cards," said Claire Gruppo, president of Special Interest Video, a direct-mail marketer in New York.

A protest by a group of Boston restaurants in March forced American Express to reduce the fees it charges eateries for transactions authorized through electronic terminals.

Catalog companies, whose customers charge $8 billion a year on American Express cards, now want their fees cut, too.

The catalog industry "has companies doing millions of dollars of transactions a year electronically, and we don't pay the same rates as the restaurant down the street does," said Erv Magram, president of Lew Magram Ltd., a New York-based woman's apparel catalog company. "There is an inequity there."

Fees for MasterCard and Visa transactions typically range from 2 percent to 4 percent of the sale; for American Express transactions, they range from 2.5 percent to 5 percent.

Concerns over fees are cropping up throughout the catalog industry, said a spokesman for the Direct Marketing Association, which includes almost 400 catalog companies.

Fees are expected to be a hot topic at the trade group's catalog conference in Chicago on June 4, he said.

Mr. Magram said he has no plans to stop taking American Express, but he added, "We have some questions for them."

DM News, a newspaper for the direct marketers, reported last week that some catalog concerns may stop accepting the card in some cases to determine the impact on sales.

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