Merchant Innovation

Simplifying The Small Merchant Uphill Payments Battle

Running a small business is complicated. SMB owners don’t just wear many hats – they wear every hat. It can be extremely difficult for them to juggle the several demands they face while keeping an eye on the bottom line, says Tyler Vaughey, Vice President, U.S. Small Merchants, American Express. PYMNTS recently caught up with American Express to find out how they are accelerating deposits and simplifying payments platforms for small merchants, for whom managing cash flow can prove to be the ultimate uphill battle.

Running a small business is complicated. Small business owners, who play the role of CEO, CFO and CMO, don’t just wear many hats – they wear every hat – and managing the responsibilities of those roles while keeping a close eye on the bottom line can seem like an uphill battle.

“The grind on a small business owner can be very daunting,” said Tyler Vaughey, Vice President, U.S. Small Merchants, American Express. “We keep an open dialogue with our small merchant partners and one thing we continually hear from them is that it can be difficult to find the time to juggle the numerous demands they face.”

It is in that spirit that the American Express U.S. Small Merchants Group, a unit within the company led by Vaughey, has started to revamp its offering to small merchants in order to help simplify their lives as business owners.

“We provide our card-accepting merchants with much more than just the means of accepting payment from American Express Card Members,” said Vaughey. “We are constantly fine-tuning that offering so that we can help small business owners focus on running their business and spend less time thinking about their payments platform.”­­­­

In looking at how they could positively improve the lives of small business owners, Vaughey and his team focused on two core areas when upgrading their policies: time and money. That focus has brought on the unveiling of upgrades that help small merchants manage cash flow and make it easier and more efficient to accept American Express.


The Power of Simplicity

Before American Express introduced OptBlue, a program aimed at bringing more small merchants into the American Express network, accepting more than one credit card brand meant that small merchants had to manage multiple relationships for contract and servicing, which was time consuming. Now, the company has made it much easier for existing small merchants to manage payments, and has also made changes to welcome new Card accepting small merchants to American Express.

OptBlue enables merchant acquirers to contract directly with U.S. merchants that have less than $1 million in annual American Express charge volume, which represents the vast majority of merchants who accept card payments in the U.S. Participating acquirers own the contract, determine pricing and perform servicing for the merchants who sign up.

As a result of the program, OptBlue merchants are able to interact with one point of contact and deal with one settlement process for all card brands that they accept. Previously, merchants contracted directly with American Express to accept its cards, requiring it to have multiple relationships for other card brands that they accepted.

There are currently 13 merchant acquirers that have signed on to the OptBlue program, including eight of the top 10 U.S. merchant acquirers based on market share.


Timing Is Everything

Vaughey and American Express knew through conversations with its small merchant partners that one of the biggest pain points for them was cash flow, because of the time it required to manage and the importance of it to the success of their business.

Understanding how critical cash flow is to the health of a small business, the payments company has cut in half the time it takes small merchants to receive the proceeds from their credit-card transactions. Now, small merchants, who rely on quick transaction settlement to improve their cash flow, can see funds deposited into their accounts within as little as a day after submitting American Express card transactions. That’s an improvement from the three days that it typically took for merchants to receive their American Express card-payment funds.

The streamlined process is the result of changes American Express made to its speed of pay, which is the time it takes between when the merchant submits a transaction to a processor and when the funds are deposited into the merchant’s bank account.

“For small merchants, managing cash flow is a key challenge,” said Vaughey. “By accelerating deposits to merchants, w­­­e’re able to help them pay vendors more quickly and run their business more effectively.”­­­­

U.S. small merchants may also have an easier time reconciling their bank statements as a result of another feature introduced by American Express. Instead of having the discount rate and other fees charged on American Express card transactions deducted each time they submit transactions for processing, U.S. merchants with less than $1 million in American Express charge volume have the option to have the fees deducted once a month, making the accounting process simpler for them.


 This content was developed in partnership with American Express





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