American Express Co. is ready for its new small-business program, OptBlue, to take the spotlight after several months of testing and a soft launch with acquirers.
OptBlue, an upgrade to Amex's OnePoint statement-consolidation program, allows acquirers to set pricing for merchants accepting $1 million or less in annual American Express transactions. Amex wants to send the message that is has become much easier and less expensive to do business with.
It was common to hear merchants complain about paying around 3.5% for Amex transactions when they paid only 2% on Visa or MasterCard transactions, says Trent Voigt, CEO of JetPay Payment Services, a unit of Berwyn, Pa.-based acquirer JetPay Corp. "They were asking, why would they take American Express?"
Third-party acquirers can now establish prices to match Visa, MasterCard or Discover, says Ed Jay, Amex's executive vice president of merchant services for its America Group. He would not disclose Amex's U.S. rates.
"It's a big change for us, but with perceptions that the merchants believe we are significantly higher priced than we really are, this is a way to have pricing from acquirers," Jay says. "It is better for us and better for merchants."
American Express revealed OptBlue privately to acquirers in November 2013, and has only recently begun speaking openly about it. JetPay is one of the first acquirers in OptBlue.
"The program is really positive and all aspects are working properly," says Voight. The first 30 days of the program allowed JetPay and Amex to iron out any bugs needed to get OptBlue working, Voigt says.
Merchants appreciate the single billing and single statement, and the fact that they get paid for Amex transactions sooner than in the past, Voigt says. "They were always having to balance all of their statements, in wondering how much was their Amex bill, and how much was Visa and MasterCard."
Small merchants had the perception that American Express was too expensive to deal with, Voigt says. The card brand's early marketing campaigns created that illusion as well with travelers' cards emphasizing global use at high-end restaurants and hotels, Voigt adds.
"The high-end use has eroded over the years, and American Express had to do this [OptBlue] to get in the game with small merchants," Voigt says.
Small merchants liked the idea that American Express delivered high-value cardholders, but didn't like that its transactions were priced differently, Jay says.
"Many aspects of dealing with American Express were different from dealing with the other card brands," Jay says. "With OptBlue, we are shifting the responsibility of all of those pieces to a third party."
OptBlue represents a far easier on-board process for merchants as well as "taking the perception that American Express is significantly higher-priced out of the equation," Jay says.
The program should be attractive to acquirers, says industry analyst Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group, LLC.
The vast majority of small merchants are below the $1 million mark in American Express volume, so the card brand's acquiring partners will be able to pitch OptBlue to a wide audience, Ablowitz says.
"The value exchange is what matters [to American Express]," Ablowitz says. "No longer do they have to take phone calls directly, no longer do they have to deal with chargebacks, no longer do they have the liability."
With servicing the account and liability being pushed down to the acquirer, it is "logical that the party who takes that on also gets some of the profit," he adds.
TransFirst is also live with OptBlue. Vantiv, Global Payments, Heartland and WorldPay plan to start soon as well. American Express will announce more acquiring partners over the next few months, Jay says.