Magazine article American Banker

Grand Hotel Fight: American Express versus Visa

Magazine article American Banker

Grand Hotel Fight: American Express versus Visa

Article excerpt

The bitter war between American Express Co. and Visa U.S.A. has moved to a new battleground - the hotel industry.

American Express for nine months has quietly told hotels nationwide that it would reduce its fees when they accept its charge card. But Visa is warning the innkeepers not to take the bait.

The travel-and-entertainment card giant is offering a rate reduction of about 35 basis points on card transactions handled electronically. But it has simultaneously asked the hotels to sign agreements giving American Express a stronger voice in how they market the credit cards they accept.

Dominance Challenged

The move comes as American Express Travel Related Services Co. strives to retain its longtime dominance of the hotel market in the face of defections by merchants who have protested the company's high fees.

American Express' card acceptance fees range from 2.5% to 5% of each sale; MasterCard's and Visa's run from 2% to 4%.

Visa, for its part, is believed to have helped orchestrate the past year's revolt by many merchants against American Express fees. Indeed, after Visa alerted them to the pricing differential, many stores and restaurants began marketing Visa as their preferred form of payment.

Now Visa - which is in the midst of its own campaign to lock in lodgers with a "We Prefer Visa" promotion - is again going directly to the merchants.

Last month, it began mailing two-page letters to most hotels and motels in the United States, warning them to look twice at American Express' rate reductions and to be wary of locking themselves "into conditions that limit competitive freedom. …

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