merican Express, the big charge card
company (you've heard of it), has about 55 million charge cards
circulating in the global economy, and the holders of those cards
charged more than $72 billion in goods and services in the third
quarter. American Express got about $1.9 billion of that, plus
about $423 million in cardholder fees. It's a pretty good business.
In the first nine months of this year, American Express reported a
net profit of about $1 billion on revenue of $15.7 billion.
It is against the backdrop of these very large numbers that
American Express last month decided to impose an annual fee of $195
on all U.S. travel agencies and tour operators that have merchant
accounts for accepting the American Express card.
As originally conceived, the fee would have applied to all U.S.
travel agencies with merchant accounts, regardless of the type or
volume of their transactions. Initially, fewer than 5,000 agencies
were to be affected.
After getting some feedback, the company decided the fee won't
apply to agencies that use their merchant accounts solely for
processing their own consulting and service fees. That brings the
affected agency population down to fewer than 4,000 U.S. agencies.
As such, the fee will generate less than $800,000 for American
As a percentage of the overall revenue generated by the card,
$800,000 is -- well, truth is, we couldn't make our calculator
produce a number that small. American Express claims the fee is
justified because its travel accounts require "heightened daily
maintenance," owing to the fact that "American Express makes
payment to merchants in advance of services being performed."
Perhaps the lesson for travel agents here is that a successful
business can't be timid about passing on its increased costs to its
customers, no matter how ridiculous it might seem to the