Dive Brief:

• American Express added 1 million U.S. merchants last year to achieve "virtual parity" with competitors Visa and Mastercard, CEO Steve Squeri announced Friday in the card network's latest quarterly earnings call.
• To catch up to market-leading payment networks, former CEO Ken Chenault oversaw the creation of the OptBlue program, which aims to entice small businesses to accept AmEx by offering lower costs.
• The company offered sign-on bonuses of up to $450,000 to a small number of businesses to accept the network, Banking Dive reported in November.

Dive Insight:

Some merchants had been reluctant to accept American Express because of its interchange fees, which are higher than those of Mastercard or Visa, because AmEx doesn't make as much in interest off of its customers. Many of AmEx's products are charge cards whose balance must be paid off each month, whereas credit cards allow for rolling balances and pass double-digit interest rates on to customers.

Now, the gap between AmEx's swipe fees and those of other payment networks is shrinking. Swipe fees for Mastercard and Visa credit had a weighted average of 2.12% in 2016, while American Express had a weighted average of 2.36%, according to data from The Nilson Report. But in 2018, Mastercard and Visa credit had a swipe fee weighted average of 2.26%, while AmEx had 2.3%, additional data from The Nilson Report found.

Additionally, Visa and Mastercard have blurred any market advantages American Express might have offered. AmEx traditionally sold itself on the perks it could give its wealthier clientele. But other networks in recent years have been able to partner with issuers, such as Citi, to offer rich cash-back and travel rewards. 

American Express has caught up gradually, since announcing in 2016 that it could reach parity by the end of 2019. "We continue to grow merchant acceptance of American Express cards around the world," the company said in its 2018 annual report. "We made progress towards our goal of having American Express cards accepted at virtually all merchant locations that accept both Visa and Mastercard in the United States, adding more than a million new merchant locations in the United States in 2018."