Apple Wants Web, FedEx Wants The World And Amex Just Wants To Hold On

Spring has (finally) sprung, Easter has come and gone and the 2016 Presidential election season is entering into what feels like its tenth year – even though the calendar tells us it has only been 10 months.  

So what do you need to know to be the office break room’s sunny, chocolate-loving, political-agnostic MVP this morning?   

Amex’s high drama continues, Apple Pay is hitting the mobile Web and FedEx has given Bongo a reboot, complete with a new name (thank goodness for that).

Let’s dive in.  

American Express – The Saga Continues

Last week started with news that Amex CEO Ken Chenault is looking at a pay cut care of a board that seems to be rapidly losing its sense of humor over the card network’s recent run of poor fortune.  

All in, Chenault will see his pay reduced 26 percent and down to its lowest level since 2008. 

Before you are tempted to set up a crowdfunding site to help him pay his bills, note that Chenault remains one of best compensated financial services players out there. His salary for 2015 nets out to about $18.5 million — less than the $25.1 million he brought in in 2014, but still more than Bank of America’s CEO Brian Moynihan, who earns a mere $16 million or so a year.

“While compensation did come down quite a bit, it’s still high relative to the company’s subpar performance in 2015,” said William Ryan, an analyst at Portales Partners LLC who rates the stock sector performance. “Investors have lost a lot of confidence in the leadership at American Express, and, obviously, his ability to get the company back on track in 2016/7 will be key to restoring confidence in his abilities.”

Chenault offered no official comment on the haircut his paycheck has taken — though on his firm’s admittedly lousy performance (it is hard to describe losing over a third of one’s market cap more favorably than that) he has commented.

“We recognize that our 2015 performance was disappointing,” Chenault told investors during an annual presentation on March 10. “I can assure you: We’re not standing still.”

And while American Express is not standing still, they are probably hoping Marriott and Starwood will when it comes to the proposed merger between the two chains.

American Express and Starwood currently offer a co-branded credit card that for some time that allows guests to earn points on purchases unrelated to hotel activities. However, according to some recent analysis, the odds are good that should Marriott win the buyout — American Express can kiss that co-branded card deal goodbye. 

“The Marriott rewards scheme better incentivizes revenue-generating spend for the hotel chain (bookings, etc.) relative to non-revenue-generating credit card spend (outside hotel properties). Additionally, we find that Starwood’s [preferred guest] program is more costly to fund than Marriott Rewards. Each of these factors, in conjunction with the fact that running parallel offerings is unwieldy and expensive, leads us to believe that a consolidation of rewards programs would be an inevitable outcome of a Marriott/Starwood merger.” 

Uh-oh. Another co-branded card may, in fact, bite the dust.

Apple Pay Hits The Mobile Web

News broke last week that Apple Pay is set to make its next expansion. Onto the mobile Web.

According to reports, the newly expanded version of Apple Pay will allow Apple’s Touch ID fingerprint offerings to be made available to consumers shopping through the Safari browser (of course, using the iPhone and iPads that allow for fingerprint IDs in the first place). Up in the air: whether the service will be available through laptops and/or desktops.

There is no official confirmation of the expansion yet, or details on what website will have embedded Apple Pay going forward — though some are speculating that an announcement could come as soon the firm’s WWDC conference in June.

But Apple is entering a crowded arena and will some competitors that have the jump on them in a big way. Visa Checkout has more than 10 million users and 250,000+ merchants. PayPal has staked out its own claim with 13 million+ merchants (including half of the top 500 online retail websites), 180 million consumers and its 18 million+ One Touch users.

Apple on the other hand owns its ecosystem and hopes to become a serious contender for those already using its mobile gadgetry. And given the numbers we reported just last week, Apple needs to get its payment platform kicked into high gear — stat — and get more shoppers actually using it regularly.

As it stands now, more shoppers than ever are putting a toe in the water and at least trying it, but the conversion rate — that is, browsers becoming buyers — is less sanguine. The repeat buying patterns, and buying patterns in general, show eligible use, defined as people with the right phones in a store that accepts Apple Pay, down 41 percent year over year. 

The question now is can Apple get merchants psyched to get a new payment method notched into their checkout flow — and will there be enough demand from users to push those notches.

It’s still an uphill battle any way you cut it.

Bongo Is Now FedEx CrossBorder

Amazon is clearly all over delivery — by air, by land, by sea and (as of last week for the first time officially in Nevada) by drone. And as Amazon’s logistics ambitions have built up, the ecosystem has wondered (increasingly loudly of late) if perhaps it is time for FedEx to be getting nervous about Amazon moving in on their turf.

Officially, they are not bothered at all. One exec noted during FedEx’s last earning call that given the “extremely capital intensive nature” and “sophisticated information technology” requirements of running a real deal shipping network, they are less intimidated than newspaper headline writers think they should be.

But just because they aren’t worried, doesn’t mean they aren’t all about leveling up and being more competitive — just in case.

Which leads us to last week’s announcement that FedEx is making moves to enter eCommerce on a global scale.

FedEx Trade Networks, the international freight forwarding arm of FedEx Corp., announced yesterday (March 22) that it is relaunching Bongo International as FedEx CrossBorder, positioned as an eCommerce technology solutions platform that enables online retailers to deal with cross-border commerce issues, such as regulatory compliance, secure payment processing, multi-currency pricing and credit card fraud protection, as well as connecting them to eCommerce consumers around the world.

“Customers are looking for ways to tap into eCommerce markets internationally, and FedEx CrossBorder helps provide that access,” James R. Muhs, president and CEO of FedEx Trade Networks, stated in a press release. “FedEx CrossBorder expands the FedEx portfolio and provides [online retailers] with opportunities to ship locally and grow internationally. [Online retailers] ship their orders to one of our domestic locations, and FedEx CrossBorder gets the orders to the customers’ international destinations.”

FedEx CrossBorder is designed to work with a retailer’s existing website and shopping cart platform, allowing those companies to maintain their brand identity, while expanding their consumer reach in more than 200 countries and territories.

“Only about one-third of U.S.-based global eCommerce sites accept foreign currencies, and research tells us that customers are more likely to abandon shopping carts that only show U.S. dollar pricing,” Chip Hull, vice president of FedEx CrossBorder, commented in the press release.

“FedEx CrossBorder addresses international purchasing obstacles with a seamless checkout and delivery approach that accepts over 80 currencies, provides 15 payment options, manages multiple delivery options and offers credit card fraud protection, all through a single platform.”

So what did we learn this week?

Sledding is rough at American Express – and things could get a smidge worse if Marriott’s bid for Starwood goes through. Apple Pay is getting ready to play with the mobile payments big boys on the Web, but still has some problems getting consumers to care. And FedEx definitely doesn’t care at all about what Amazon (or Uber) are doing — they just want to be a global eCommerce shipping player, somewhat more intently than they have been in the past.