AmEx Claims 400,000 Small Merchants Through Its ISO-Driven OptBlue Program

Some 400,000 small merchants now accept American Express Co. payment cards through the OptBlue program that AmEx announced nearly a year ago. OptBlue enables bank card merchant acquirers and independent sales organizations to offer AmEx acceptance to small businesses and set the pricing through a one-stop-shopping option when they sell acceptance of other card brands.

At least a dozen major bank card acquirers and merchant processors now offer OptBlue, up from six when AmEx announced the program in February 2014 and through them “hundreds” of ISOs are enrolled, according to Tom Pojero, AmEx senior vice president and head of acquisition strategy. Pojero, who spoke Wednesday at the Northeast Acquirers Association annual conference in Boston, expects many more ISOs to join OptBlue because most of the sponsoring acquirers are still rolling the program out. “It’s going to scale up in 2015,” Pojero tells Digital Transactions News.

Under OptBlue, AmEx sets wholesale pricing but the processors and ISOs are free to set retail pricing to merchants. The program also offers unified settlement and customer service, through the acquirers, in addition to consolidated statements. By bundling AmEx acceptance with that of the other card brands and letting ISOs and acquirers set the pricing, AmEx hopes to remove barriers that for years prevented small merchants from accepting its cards, which traditionally have been the most expensive of the four major credit card brands to accept.

“The reaction in the market has been overwhelmingly positive,” Pojero told his NEAA audience, but he added, “it’s not perfect.”

OptBlue replaces an older program called OnePoint that enabled bank card processors and ISOs to sell AmEx acceptance with other card brands, but AmEx set the retail pricing and owned the merchant relationship of any small businesses they signed. OnePoint will be phased out by June.

If an OptBlue merchant reaches $1 million in annual AmEx volume, it must get its own merchant account from AmEx. But Pojero said “99%” of small merchants generate less than that cap in AmEx volumes. He said AmEx took a “huge hit” in margins when it set OptBlue’s wholesale rates, but it did so to generate more charge volume for its network and add more places where its cardholders could use their cards.

AmEx is further tweaking the program by aligning its merchant-category numbering system with those of Visa Inc. and MasterCard Inc. Pojero also said AmEx is keeping its pricing simple, claiming that AmEx has 27 overall price points versus more than 100 for other networks. “We’re not looking to create all these nickel-and-dime fees,” he said.

Acquirers in the program include First Data Corp., Global Payments, TransFirst, Elavon, Vantiv, First American Payment Systems, JetPay, Merchant e-Solutions, EVO Payments International, Total System Services (TSYS), Wells Fargo and Worldpay.