Amex Shoots Down OptBlue Rumor

American Express today dispelled market rumors that it would expand its OptBlue program.

The program, launched in May 2014, allows merchants who charge less than $1 million a year through American Express, to use one of 18 merchant processors to secure a lower discount rate. Market participants tell Bank Innovation that demand for the program, which can save merchants around 70 basis points, in some cases, has been on the upswing.

nyfed-cards-by-score-lgThe rumor in the payments sector is that Amex will increase the threshold to $2 million to expand the scope of the program. But an Amex spokesman communicated to Bank Innovation that “we are not planning to change that criteria.”

OptBlue is interesting because it addresses a weakness in American Express’s business: card acceptance. It is generally smaller merchants that forgo accepting Amex cards, because the discount rate can be too high — perhaps 3.5% for merchants that don’t produce much annual Amex volume. That compares to discount rates for smaller merchants in the mid 2% range for MasterCard, Visa and Discover.

But OptBlue counters that weakness, opening Amex to more smaller merchants. Expanding the OptBlue charge threshold would bolster that effort.

Amex declined to share transaction volume through the program. Among the merchant processors supporting OptBlue are First Data, Heartland Payments Systems, TSYS and Vantiv.

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