Market Overview

Report: American Express Offers Sign-On Bonuses In Effort To Catch Up To Mastercard, Visa

Report: American Express Offers Sign-On Bonuses In Effort To Catch Up To Mastercard, Visa

American Express Company (NYSE: AXP) is determined to gain market share from top credit card rivals Visa Inc (NYSE: V) and Mastercard Inc (NYSE: MA), and it's paying a high price to do so.

The Wall Street Journal reported Mastercard has been paying businesses bonuses of between $10,000 and $450,000 to accept their cards.

Why It’s Important

American Express told investors back in 2016 it would close its market share gap with Visa and Mastercard by the end of 2019, and the company is reportedly coughing up major dough to achieve that goal. The company said it has added more than three million new businesses as partners since 2017 and has dished out about 33 sign-on bonuses since 2018.

“[American Express] made a business decision to provide targeted sign-on incentives to strategic, priority holdout merchants, which comprise a tiny fraction of a percent of the merchants we acquire in a year,” Anré Williams, head of AmEx’s global merchant and network services, told WSJ.

The credit card market accounted for about $3.6 trillion in purchase volume in 2018. Visa (48.4% share) and Mastercard (31.8% share) have the lion’s share of the market, followed by American Express at 12.3% and Discover Financial Services (NYSE: DFS) at 7.5%.

Benzinga’s Take

American Express will be watching to see if the company’s expensive push to be accepted at more businesses will help shift the market share balance more in their favor.

Over the past two years, American Express’ push to gain more business partners hasn’t been reflected positively in its stock price performance relative to peers. Mastercard has been the top-performing stock, gaining 89.3% in that stretch followed by Visa (+65.3%), Discover (+30.2%) and American Express (+28.3%).

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Posted-In: Wall Street JournalMedia Best of Benzinga