Updated
Who Pays for Amex Offers?
This is a question many have wondered and a reader recently brought up.
When Amex Offers first came on the table a while back, I had assumed that Amex is offering credits at various stores, similar to any other credit card rewards program. And that’s likely the way Bank Of America’s program BankAmeriDeals works. Over time, it became clearer and clearer to me that with regards to Amex it’s the merchant who is footing most/all of the bill.
Case in Point: It’s been pointed out that Sam’s Club recently added a shipping fee on many gift cards, clearly in response to the overwhelming response to the recent Amex Offer there. They also stopped carrying lower denomination Sam’s gift cards thus requiring us to lock in some money and not get anything totally free. We updated the post All You Need to Know About the Sam’s Club Amex Offer to reflect the new reality. (I’d guess that after the offer expires, we’ll see these changes revert back.)
If Amex is footing most/all of the bill, it’s hard to understand why Sam’s would be too concerned about the influx of orders. At the very least this indicates that half or more of the bill is being footed by Sam’s. We found one data point indicating this as well that it’s the merchant who is funding the offer, not Amex.
It’s quite possible that Amex gives some perks to the merchant. Perhaps the merchant doesn’t need to pay processing fees on those transactions. Perhaps Amex negotiates other discounts/rates as part of the deal.
The Exceptions
The obvious exception to this the case of Small Business Saturday where Amex is clearly footing the bill. There’ve also been similar such offers such as Small Business August which wasn’t specific to a single merchant and it was Amex covering the cost.
No Backsies
Another interesting thing worth noting is that with the Sam’s offer and the recent Smart and Final offer, it appears that both merchants were caught off guard and didn’t realize how it would play out. Yet, in both cases, they did not immediately pull the offer from being further available. Seemingly, that would have been the logical first step in damage control.
This leads me to believe, that when a merchant agrees to an offer with Amex, they have a solid contract agreement with regards to how many offers will be available or how long the offer will be available. They can’t just call up Amex and ask them to take it down.
It still surprises me a little that Amex wouldn’t be willing to make an exception and pull down the offer early; deal-hunters are hardly the demographic that Amex is trying to please.
