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eBay has had enough — or so it seems based on the e-commerce company's scathing statement issued this morning. The swipe fees it incurs every time you charge an eBay purchase to your American Express credit card are too much to bear in its view. And as a result, eBay is cracking down on what cards you can and can't use to shop its website.
Here's what eBay users need to know.
eBay To Crack Down on What Cards You Can Use at Checkout
Credit card interchange fees are a controversial topic. It's how the card issuers makes money — and how they fund rewards programs you know and love. Merchants, on the other hand, don't care for them as much. After all, 1% to 3% of your transaction amount — plus, at times, a flat fee — goes to the issuer. That's money that the merchant doesn't get to keep.
American Express is known for having some of the highest interchange fees of all card issuers. In fact, its swipe fees are one of the main reasons Costco walked away from an exclusive 16-year-long partnership with Amex eight years ago. High fees mean lost revenue for businesses, and that's why you can no longer use an Amex card to shop at Costco.
And in August, high interchange fees will spell the end of another business relationship — this one non-exclusive, like the one with Costco.
eBay has signaled a change come August 17, 2024, after which customers won't be able to pay for purchases with American Express credit cards. Simply, eBay found Amex's swipe fees to be “unacceptably high.” It'll share more details about its decision with customers in the near future.
Muted last-quarter earnings likely drove eBay to make the call. Although, as user forums indicate, eBay has sporadically not allowed Amex cards in the past. So, whether or not this restriction sticks is anyone's guess. In a statement to AwardWallet, eBay put the ball in Amex's court:
“We are always willing to engage in discussions with partners such as American Express.”
In response to eBay's decision, Amex issued a statement sharing its disappointment but mentioned that “eBay represents less than 0.2% of our total network volume. American Express Card Members can continue to use their Cards with millions of merchants around the world.”
In other words, “We’ll be fine without you; don’t try to flex on us.”
Related: The Best Credit Cards for Online Shopping
Final Thoughts
On August 17, 2024, eBay will no longer accept your American Express credit card. You'll have to use a card from another issuer. This move is unfortunate if you've habitually used a Membership Rewards-earning card to cover your purchases. And it's just the latest example of Amex's high fees making life difficult for cardmembers.
Will you be able to check out with PayPal as your payment method and set an Amex card as your default card within PayPal? We'll see.
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The possiblity that credit card swipe fee reform – capping, regulation, or even elimination of credit card interchange fees – could become a reality has also informed my strategy – and my toolset – to reflect the possibility of the airline and credit card rewards landscape changing to look more like Australia’s (1 point ONLY per dollar on EVERYTHING, which is also how things used to be in USA a couple decades ago when swipe fees were lower, but this time with even higher annual fees (maybe a full $1,000 per card) and possibly even universal spending caps on earning rewards, requiring additional cards to even earn more rewards. My strategy is also considering the possibility of airline and credit card rewards substantially (probably not entirely) disappearing, or at least those I already have getting “devalued” by the credit card issuers, so always considering how to keep travel premium even without rewards points, should that come to pass. All those possibilities happened to some extent in Australia when their government capped credit card fees. Although I would not be surprised if airlines might actually reduce point redemption requirements in their programs if credit card points earning gets the kibosh – but Im not holding my breath on anything.
To me the travel rewards landscape and how best to optimize is always evolving anyway. All another reason to put Grant Cardone’s reminder (“You have an income problem, not a spending problem.”) front and center. Nevertheless, I have routinely signed the petitions to Congress urging not to pass Credit Card Competition Act that various travel rewards bloggers and travel industry trade associations have sent me, and also following the email blasts of the other side (convenience retailers) trade associations.
A little gripe – retailers supporting “Credit Card Competition Act” are completely ignoring and being unthankful that those 3% more or less credit card fees mean cards drive way more business than they would get otherwise. Way more than in countries with much lower credit card fees. More than their own marketing efforts. Studies have shown loyalty program members especially travel rewards recipients spend 20%-30% more per tab then everyone else. So many other marketing tools are way more expensive (10%, 20%, 50% or more of sales – does that mean government should cap those too !!!??? I suppose retailers would just rather make less money than pay the fees that bring the traffic and with it the moolah. Not to mention that physical businesses that accept cash get robbed by burglars, making in store shopping and eating out less safe for all of us, especially those who work in physical retail and restaurant.). Cashless can be (and often is) posted on site, that way deterring would-be thieves (and also giving paying customers a heads-up). Sorry, and thank you, for bearing with my rant.