How Amazon is fueling Amex's small-business expansion
American Express has positioned itself as a small-business champion for decades — highlighted by its 2010 invention of Small Business Saturday — but its partnership with Amazon illustrates the paradox of supporting mom-and-pop shops by enabling them to buy supplies from their largest competitor.
The Amazon Business American Express card, a black, metal card designed in a vertical rather than horizontal format, falls directly in line with bolstering Amex's ongoing small-business strategy of the past couple of years — particularly in light of the loss of Costco Warehouse and JetBlue to its card portfolio.
"When you look at Amex, there is a lot of revitalization going on there and that's exciting," said Brian Riley, director of card services for Mercator Advisory Group. "And from the Amazon side, it's a trophy name and a total winner."
Previously, Amex was banking on great success with OptBlue, its program allowing acquirers to adjust payment processing costs as needed for small business owners. More than 700,000 small merchants signed onto the program in its first year of operation, and the card brand's OptBlue site reports that 1.5 million new small merchants began accepting Amex cards in 2017 alone. Previously, Amex had noted that as many as 9 million new merchants have been on board since the program started.
Now, Amex is hoping that these businesses will not only accept its cards but will use them for ordering their own supplies as well.
"There are many different ways we strive to serve as the advocate for small businesses, from helping entrepreneurs identify and seize new opportunities all the way up to hundreds of millions of dollars in growing small and mid market businesses," said Courtney Kelso, head of U.S. commercial card solutions at Amex.
The Amazon Business card moves Amex more into the day-to-day operations of the business owner. It's set up as a card for those merchants who buy from Amazon often, giving Amazon Prime members the option to get 5 percent back on a transaction, or initiate a 90-day interest-free payment term.
In addition, the card provides line-item information on purchases that small businesses rarely see on monthly credit card bills.
"The card member has access to the number of items purchased, what the items were and the cost per unit," Kelso said. "This is data usually seen only through invoice-level buying, the type of thing reserved for the biggest of businesses."
Small business owners using the card will be able to use that data to more easily reconcile costs across different projects, jobs or clients, Kelso added.
The card connects to QuickBooks accounting software and the American Express Spend Manager, which allows the merchant to obtain receipts through a mobile app when not at the office. The cards can also be converted to no-fee employee cards with designated spending restrictions.
For Amazon, the Amex business card gives it a full range of co-branded card products in the market that can serve it long-term, Mercator's Riley said.
A Chase-Visa Amazon card for consumers has been in place for more than seven years, and Amazon also has a private card partnership with Synchrony Financial.
"Amazon will benefit from American Express' decades of experience with small businesses," Riley said. "Amazon would love to be there, so that's an exciting play for them."