John R
Daytona Beach,#2Consumer Comment
Tue, January 08, 2013
It seems there is alot more to this new BLUECARD card then meets the eye. I have worked in the retail industry for several years and do know that American Express is NOT accepted in many small venues. The reason they are usually not accepted is because of the high discount rate they charge the merchant on submission for settlement. This amount can be up to 4% of the total sale price. In other words the merchant only receives 96 cents on every 1 dollar as deposited settlement. (this includes sales tax of which the merchant is 100% responsible for)
Visa and Mastercard are flexible in their discount rate and can charge, depending on the card processor (not merchant) up to around 2.5% on total sale. American Express is noted for undue delay in depositing these funds to merchant accounts. They, American Express, also issue separate statements from all the other cards to the merchant.
American Express could have avoided all of this by having American Express Bank as the issuer of BLUEBIRD as they are FDIC insured. Admittedly the government regulation they are hiding under (31CFR 210.5 (b)(5)(i) in part says : Where a Federal payment is to be deposited to an account accessed by the recipient through a prepaid card, says the statute, the account has to be at an insured institution, and it has to have FDIC insurance.) is to their advantage not to use this bank as this would increase the amount they would have to pay into FDIC.
This only enforces as to why American Express ever came into holding an FDIC bank was to receive tarp funds to insure day to day operational expenses (bail out) in 2008/09 ( American Express received 3.39 billion in TARP funds on January 9th, 2009)