American Express' OptBlue program has added 700,000 small merchants in the past 14 months, wooed by the promise of better fees for Amex acceptance. But it's still too early to declare the program a success.

The next critical step is making sure Amex cardholders start using their cards at merchants that previously were reluctant to accept them, said Jeff Campbell, executive vice president and chief financial officer for American Express, during a July 22 second-quarter earnings presentation.

"It's a multi-year effort to change perceptions," Campbell said.

American Express introduced OptBlue in May of 2014 to enable its acquiring partners to negotiate pricing with small merchants that annually generate $1 million or less in Amex transactions.  In the U.S., 14 major acquirers have signed on for the OptBlue program, and the New York-based card brand brought OptBlue to Canada three months ago through Global Payments.

The program has generally been viewed as part of the "new" American Express, one seeking to shed its image as a card for the elite.

When American Express announced in early 2015 that its 16-year co-branding deal with Costco would end in March of 2016, chairman and CEO Kenneth Chenault pointed to the card brand's push for new technology and the OptBlue program for small merchants as critical to future revenue.

To get OptBlue up and running, American Express has to overcome a "self-inflicted wound" in the perception that its card is out of the reach of many consumers and merchants, said Paul Martaus, merchant acquirer consultant and industry researcher at Martaus & Associates.

"I tried to explain Amex to merchants for a number of years and heard the same complaints over and over about cost," Martaus said. "But if you use math skills and compare and contrast what was paid for all merchant services, American Express, not having to pay interchange, was really not that far off."

The historical take that American Express wants only the "upper crust customers" and larger retailers is no longer true, Martaus said. "The previous inertia is hard to break in the marketplace, but American Express is a good company that knows what it is doing."

American Express reiterated on the earnings call that OptBlue, new card offerings, the Plenti loyalty program and American Express Checkout for e-commerce will help the company overcome the loss of the Costco relationships in Canada and the U.S.

"For American Express, broad acceptance has always been an uphill battle because merchants have been concerned about price point," said Gil Luria, analyst with Los Angeles-based Wedbush Securities.

But American Express has shown it can put the proper marketing dollars behind its programs and is likely to do so to bring consumers to OptBlue merchants, Luria said.

Because Amex cardholders typically try to use their Amex cards whenever possible at merchant locations, eventually they learn that more smaller stores have begun accepting the cards, Luria said. "It will become sort of a self-fulfilling cycle, but as it has been for the first part of American Express' history, it will be a lot of work," Luria added.

Part of that work will involve acquirers getting into the stores and making sure American Express stickers are visible in windows or near the point of sale terminals, Campbell said.

"There's no magic here," Campbell added. "It's a matter of balancing some of those basic blocking and tackling things we need to do, but we're very focused on this."

In addition to progress reports on OptBlue, Campbell told analysts that the company's Plenti loyalty program has quickly attracted 20 million consumers. Amex began managing the cross-merchant loyalty program in March.

American Express has also retained more than "half of the out-of-store spend related to the former Canadian Costco co-brand product" through a newly launched cash-back card offered to past Costco cardholders, Campbell said.

That strategy is "very specific to the Costco relationship in Canada" and has no relevance in the U.S., said Campbell, calling the U.S. situation "a very complex transaction" that he could not comment on at this time.

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