The lack of meeting differential market demands could make Costco to drop American Express. In 2014, Costco Wholesale had made a decision to drop American Express as its exclusive credit card issuer in Canada and replaced it with a Capital One. American Express is having difficult to maintain its current position in global market. And after that American Express did not find an appropriate solution after it was replaced in Canada, even worse, Costco declared to dump American Express in the U.S. and Puerto Rico in 2015, and announced that Citibank would replace American Express on April 1, 2016; (Dexheimer, 2015) additionally, the American Express and Costco co-branded TrueEarnings would not be accepted. American Express lacks the capability to adapt to new environment, and lost a lot of money after it …show more content…
The option for rewards are just cash options. On March 5, 2015, Frontier Airlines discontinued as American Express rewards transfer partner. (Lucky, 2015) So ever since American Express cannot be transferred to sky miles. Now Chase Sapphire Preferred Card has been an easy choice for travel rewards. Consumers can currently transfer points to United, Southwest, British Airline, Korean Air, Singapore or Virgin Atlantic; consumers’ points are worth at 1.4 cents each by transferring points to six airline programs’ rewards, but American Express Everyday Preferred credit card cannot transfer points to any airline’s rewards. Besides, consumers can use the points to buy flights on any airline at 1.25 cent each by Chase, while at 1 cent each by American Express. (MileCards.com, 2014) American Express should increase the flexibility of transferable points.
The third weakness of American Express is service charge. If you are an American Express card holder, you might have heard lots of this: “Sorry, we don’t take American Express.” You may wonder why so many merchants refuse to use the American Express card. It is because that American Express charges a retailer around 3.5% whenever a customer pays with one of their cards; by contrast, Visa and MasterCard only charge about 2- 3%, and sometimes less for debit cards. (KONSKO, 2013) Although the 1.5 or 0.5 percent seems like a small number, but for many small businesses where even