PayPal and American Express (AMEX)

The Redlich Law Firm no longer accepts American Express through PayPal.

I logged into my PayPal account today. There was a notice that, going forward, AMEX transactions will require a higher fee of 3.5% of the transaction, plus 30 cents per transaction.

We currently pay 2.2% of the transaction plus 30 cents, so on a $1000 fee, we pay $22.30. If we agreed to the 3.5% rate, we would be paying $35.30.

We think most of our clients pay with Visa or MasterCard. Most of our payments are through our website and we can't see what kind of card they use. But for our over-the-phone payments, we hear the type of card as we enter it.

We do get some AMEX transactions, but not that many. And I suspect most American Express cardholders also have a Visa or MasterCard.

I'm stunned at the attempt to grab so much more money from PayPal sellers. If it had been an extra 0.2%, maybe I would have swallowed hard and agreed. But the extra 1.3% works out to a greater than 50% increase in cost of this service.

This will make it easier to throw out the American Express card offers I get in the mail all the time.

Advanta and Credit Card Woes

We've been using an Advanta MasterCard for our business for several years now. So today I get an e-mail that they're canceling all their credit card accounts - in four days. Thanks for giving me time to get a new card.

Apparently we have not been like their typical customer. We paid our bills on time consistently. This article in Consumerist says that they had a 20% default rate. Hmm ... maybe we should not pay that last bill. - Nah.

So I started shopping for a new credit card for our firm. Having been a PayPal customer for about six years, I figured they would know me well enough. Nope. See below:

Don't be misled by the "You're approved" at the top. The message says that they're denying me a credit card, but approving me for a whopping $500 credit line.

I understand that the economy is tightening and credit markets are tough, but if I can't get credit then this doesn't make a lot of sense. The only major debt we have left is on our house, and we have well over 50% equity. We have been perfect on our credit card bills and car payments for years. We also have strong revenue, and PayPal should know since that's how most people pay us.

Maybe the economy is in deeper trouble than I thought.