American Express 2015 Annual Report Download - page 27

We make efforts to limit card suppression by focusing on acquiring merchants where Card Members want to use our
card; continuing to enhance the value we provide to merchants through marketing programs such as our Small
Business Saturday®and Shop Small®campaigns to encourage Card Members and other consumers to shop at small
merchants; addressing factors that influence merchant satisfaction; and providing earlier and more frequent
communication of our value proposition. We have a client management organization dedicated to growing our
merchants’ businesses and finding ways to enhance the effectiveness of our relationships with these key business
partners. Most importantly, we recognize that it is the merchant’s choice whether or not to accept American Express
cards and that all merchants have numerous options given the intense competition from other card networks with
larger cardholder bases and from new as well as traditional forms of payment. Therefore, we dedicate substantial
resources to delivering superior and differentiated value to attract and retain merchants on our network.
The laws of a number of states in the United States prohibit the surcharging of credit card purchases, although the
laws in four of these states (California, Florida, New York and Texas) are being challenged in litigation brought by
merchant groups. Conversely, there are certain countries in which surcharging is specifically permitted, such as
Australia. Where permitted by local law, our card acceptance agreements generally include a provision under which
the merchant agrees not to discriminate against our cards, such as by surcharging higher amounts on purchases with
our cards than on purchases with any other cards the merchant accepts or by imposing a surcharge only on American
Express card purchases, but not on purchases made with other cards. We do not prohibit merchants from offering
discounts to customers who pay with cash, check or inter-bank transfers (i.e., Automated Clearing House or “ACH”).
In addition, we do not prohibit U.S. merchants from offering discounts or in-kind incentives to customers who pay with
particular forms of payment in accordance with the provisions of Dodd-Frank.
Enhancing Merchant Satisfaction
GMS is focused on understanding and addressing factors that influence merchant satisfaction, including
developing and executing programs that increase the usage of American Express cards at merchants, using
technology resources and innovative marketing tools such as social media, and applying our closed-loop capabilities
and deep marketing expertise. Our closed-loop network and other relationships allow us to analyze merchant data and
information on Card Member spending. This enables us to offer a range of targeted marketing services, network
capabilities and special offers for the benefit of merchants and Card Members through a variety of channels. At the
same time, we protect the confidentiality of Card Member and merchant information in compliance with applicable
privacy, data protection and information security laws, other applicable legal requirements and our internal policies.
We also work closely with our card-issuing and merchant-acquiring partners to maintain the information that supports
key elements of this closed loop, providing value to Card Members and merchants.
For example, we connect merchants and Card Members through Amex Offers, a centralized portal that provides
Card Members with merchant offers. Card Members can access these offers on their online account and mobile app
and redeem them for couponless savings, reflected as statement credits. Amex Offers can help merchants attract new
customers and generate repeat business by targeting relevant offers to Card Members. In 2015, we launched Amex
Offers in the UK and Australia.
We offer fraud prevention services to merchants for transactions on the American Express network, and our
subsidiary, Accertify, Inc., is a leading provider of solutions that help merchants combat fraudulent online and other
card-not-present transactions. Accertify provides a hosted software application that offers an extra level of security
for transactions on any of the major payment networks, including American Express, Visa, MasterCard, Discover and
PayPal, or using any other alternative payment method. Accertify also offers merchants the option to outsource their
end-to-end fraud management process to Accertify and provides other value-added services.
We also offer Merchant Financing, a set of products providing qualified American Express accepting merchants with
access to convenient, attractively priced fixed-fee financing to support their business needs. The financing offered is a
commercial loan, repaid automatically through the merchant’s daily charge submissions or business bank account.
We continue to focus our efforts in areas that make use and acceptance of our cards more secure and convenient
for merchants and Card Members. We participate in standard-setting bodies, such as EMVCo and PCI Security
Standards Council, LLC, designed to help drive secure and interoperable payments globally. Our goal is to make it
easier for merchants to accept our cards, for Card Members to have safe and seamless experiences at the point of
sale, and for issuers and acquirers that have more than one network relationship to have uniform technology
standards across their card products and platforms. These efforts are particularly important as emerging technologies
enabled on contactless cards, mobile phones and new payment devices offer consumers new, convenient ways to pay
for their purchases.
Billing Disputes
As the merchant acquirer, we have certain exposures that arise if a billing dispute between a Card Member and a
merchant is settled in favor of the Card Member. Drivers of this liability are returns in the normal course of business,
disputes over fraudulent charges, the quality or non-delivery of goods and services, and billing errors. Typically, we
offset the amount due to the Card Member against payments for the merchant’s current or future charge
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