eBay has announced a significant change affecting millions of users by discontinuing American Express (Amex) as a payment option starting today. This decision comes as a result of high transaction fees charged by Amex, which eBay finds unsustainable. Customers will now need to use alternative payment methods for their purchases on the platform.
Why eBay Made the Switch
eBay’s decision is driven by what it describes as “unacceptably high fees” from American Express. The cost of processing Amex transactions can reach up to 4%, making it one of the priciest options for retailers. eBay argues that these costs have become untenable, especially when other payment technologies should be lowering transaction fees rather than increasing them.
A representative from eBay stated, “We’ve decided to stop accepting American Express globally effective August 17 due to the high fees charged for processing transactions. Despite advances in technology and fraud prevention, transaction fees continue to rise due to a lack of meaningful competition.”
Impact on American Express and Its Users
The removal of Amex from eBay is a blow to the credit card company, which had over 133 million cards in circulation worldwide as of 2022. Amex was the fourth most popular payment method for e-commerce transactions, trailing Visa, Mastercard, and PayPal. This change may affect Amex users who frequently shop on eBay.
American Express responded by expressing disappointment with eBay’s decision. An Amex spokesperson criticized eBay for reducing payment options and depriving customers of the benefits associated with Amex cards, such as service, security, and rewards. The spokesperson also claimed that the cost of accepting Amex in the U.S. is comparable to other networks, questioning the consistency of eBay’s decision with its goal of enhancing competition.
Even though Amex will no longer be accepted directly on eBay, cardholders can still use their cards indirectly via PayPal. However, using this method will forfeit the protections offered under Section 75 of the UK Consumer Credit Act. This law allows consumers to claim a refund from their card provider if a retailer fails to deliver goods or services, a benefit not applicable when payments are made through PayPal.
eBay’s move is part of a broader critique of rising credit card processing costs. The company has called for stronger regulations to increase competition among payment networks, which it believes will reduce transaction costs for merchants and consumers.
The eBay spokesperson added, “As inflation and costs rise, both consumers and small businesses are affected. More robust regulations are needed to promote competition and lower transaction fees for everyone involved.”
Wider Context of Fee Increases
eBay’s decision reflects a broader trend in the financial sector where credit card fees are under scrutiny. American Express is not the first card issuer to face backlash. A decade ago, Costco stopped accepting Amex cards for similar reasons. In the UK, Greggs, a popular bakery chain, also does not accept Amex.
Other major card networks, including Visa and Mastercard, have faced criticism as well. In 2022, both increased interchange fees for transactions between the UK and the EU, with fees for debit cards rising from 0.2% to 1.15% and for credit cards from 0.3% to 1.5%. These increases have further fueled debates about card transaction costs.
eBay’s decision to end American Express payments highlights ongoing tensions between retailers and credit card companies over transaction fees. While the change may inconvenience some users, it underscores the need for a reevaluation of payment processing costs. As eBay and other retailers seek to manage these costs, consumers may need to adapt by exploring alternative payment methods.
