American Express is a leader in the commercial card world but typically holds a reputation for servicing high-spending corporates. Now, the company is looking to take market share away from its main rivals by enticing SMEs to use its cards.
Reports by Bloomberg Monday (Oct. 17) said Amex is investing efforts into gaining more ground with SMEs. Its first step, reports said, is to encourage small businesses to accept the card in the first place; American Express said it hopes to achieve the same level of acceptance among small businesses seen with Visa and Mastercard by 2019.
“We’ve really doubled down over the last couple of years,” said Amex EVP of U.S. Consumer Marketing Howard Grosfield in an interview. He added that the firm has “crossed an enormous and accelerated threshold in terms of the number of small merchants that are accepting.”
On Monday, Amex announced what reports said was its largest-ever rewards program in the effort to encourage more small businesses to accept its cards, doubling the rewards users can earn when shopping at small businesses.
But American Express has its competition cut out. Reports pointed to JPMorgan and Citigroup as key rivals to American Express and are similarly looking to expand their card operations.
“There’s certainly a competitive dynamic in the marketplace that’s focusing on rewards points,” Grosfield told reporters.
American Express’ pursuit of the small business has the company predicting a decline in the fees it charges small businesses to accept its cards as more SMEs sign on to acceptance. Earlier this year, Amex CEO Kenneth Chenault said the efforts were a “major shift” in the company’s strategy.
“This will impact our revenue growth in the near term, but over time, a larger merchant base will translate into higher billings, improved perception of coverage and great scale and relevance.”
American Express has made other moves to strengthen its position within the SME space. Earlier this year, the company partnered with marketplace lender Fundera to feature Amex cards on the platform used by SME borrowers. The company is looking to attract small businesses to use its commercial card products to gain a more competitive rate when in need of capital.
Earlier this month, American Express released new data exploring SMEs’ international expansion goals, which translate into new opportunities for the card company, it said.
“Our research shows that, despite potential challenges, many companies still see international business as an important growth opportunity,” the firm’s export advisor, Ed Marsh, said in a statement. Amex analysis found that the number of SMEs selling internationally is on the rise, with companies acknowledging a significant opportunity to increase revenue as a direct result of cross-border exports.
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