Yes, Greg, Amex 4X failure is a big deal


This morning, Greg published a post about the disappointing reports about the new Amex Gold card not earning 4x at some restaurants, even in situations where Amex clearly shows “restaurant” as the merchant code online. That’s very disappointing. While Greg asserted that this isn’t a big deal, I disagree. I think it’s a huge dealbreaker for some people.

4x or no 4x?

What doesn’t work?

Some restaurants just don’t work. Based on some reader reports, it seems like some of the following are things that indicate a restaurant will not code at 4x:

  1. Restaurants that use a Square reader. It’s actually relatively common for businesses with a Square reader to be mis-coded one way or another.
  2. Restaurants that show as TST* plus the restaurant name for the merchant name on your statement / in your transaction history (according to a reader report)
  3. Some other restaurants with no clear rhyme or reason.

In my case, I went to a place called Ablueo’s Mexican Restaurant in Myrtle Beach last week. It’s a regular (large) Texas-based chain restaurant. They do have those payment terminal things you can use at the table if you want, but ours was off — our waitress took our card and ran it. It doesn’t show up with TST* and they aren’t using a Square reader. I have no idea why it didn’t code at 4x.

I looked closely at Greg’s screenshots and my statement. For a moment, I thought the fact that one address said “United States” and another said “United States of America (THE)” might be the difference. It wasn’t. I thought that maybe it had to do with whether a restaurant had a local phone number or corporate number. That wasn’t it. I tried to find a pattern so I could know which restaurants would work, but it didn’t happen.

Looking through my own purchases, I wasn’t surprised that things like Amazon and Walmart (both online and in-store) coded at 1x, but but I was unhappy to see restaurants like Abuelo’s code as 1x purchases. At least one member of our Frequent Miler Insiders group reports having escalated this several times at Amex only to be told that they are aware and working on fixing the problem, offering to eventually credit him with the proper amount of points (though anyone who got caught up with lagging referral bonuses last year probably has little faith in that happening any time soon).

Why is this a big deal?

While Greg concluded that this isn’t a huge deal since the Citi Prestige will be awarding 5x at restaurants worldwide starting in January, it obviously doesn’t sit well with those expecting the 4x payout Amex is offering. At least one reader reported a 4-figure restaurant bill on which he did not receive 4x. That’s really frustrating. While I don’t often pay for 4-figure restaurant bills, I imagine that isn’t unheard of for some families at the holidays.

And in fact, I just went out to a family dinner with a party of 12 a week ago and paid using my card (that restaurant didn’t take Amex, but it goes to my point that large restaurant bills happen). When I go out to a group dinner with friends or family, I often offer to pay and have everyone pay me back. But if I’m dining at a restaurant and I don’t know for sure that it codes at 4x, I’d have a really hard time justifying the risk of only earning 1x Membership Rewards points when I could earn a nearly guaranteed 3x on the Chase Sapphire Reserve (or 4% cash back on an Uber Visa or Capital One Savor card). Talk about opportunity cost! That’s a steep gamble on an expensive meal. This totally neuters the benefit except on cheap purchases where you might not care since it’s not so many points anyway

If I owned a small company and paid a couple grand for the holiday party on my Amex Gold card expecting 4x only to get 1x, I’d be livid.

Furthermore, for many people, the Prestige isn’t worth its coming $495 fee. With Amex adding Avianca LifeMiles as a transfer partner, I’m less convinced that earning 5x restaurants is valuable enough to make ThankYou points a more compelling choice than 4x Membership Rewards with the Gold card. If you were planning to keep the Prestige card for 5x restaurants, I’m just not sure they have enough exclusive partners that make 5x worth the $495 fee compared to earning 4x Membership Rewards points (on US restaurants, anyway).

Of course, that’s assuming the Gold actually coded at 4x. Since it doesn’t reliably, maybe that’s an argument for the Prestige, but that’s a pretty big whammy for Gold cardholders / those locked out of Citi or without Citi ThankYou cards.

What does work?

On the bright side, many restaurants did pay out at 4x for me. In fact, most of the restaurants I’ve visited have coded at 4x as expected.

All of my US supermarket spend has coded at 4x as expected, even purchases paid for with Samsung Pay. I was initially curious as to how that would work out since the purchases say “SamPayKroger” (for instance). I wondered if Samsung Pay would add a barrier like Square sometimes does. On the other hand, I was surprised that a Samsung Pay charge at Starbucks did not code 4x.

Interestingly, I noticed that a purchase at the cafe inside Barnes & Noble (with the physical card, didn’t try Samsung Pay) awarded me 4x. That prompted me to see if I could pay for merchandise at the cafe. You can, but it turns out you don’t have to. I also made purchases at the main store register at Barnes & Noble stores in two different states last month and all of my B&N purchases earned 4x. Those into reading & education take note.

I was mostly happy to see that the US restaurants and US Supermarkets I frequent the most are coding correctly. Whatever glitch it is that causes some restaurants not to code properly won’t have a big effect on me day to day.

Bottom line

The failure of some restaurants to code at 4x on the Amex Gold card is a problem. I just think it’s a massive issue for Amex to sort out. How can you advertise a card that earns 4x at restaurants and then print on the statement that it’s a restaurant and not give 4x? I feel like that’s a CFPB complaint ripe for the making.

My biggest personal issue with it is that I no longer have enough faith in Amex coding a restaurant properly to choose the Amex Gold over another card when paying for a really expensive meal. I’m less likely to use the Amex Gold for large restaurant charges simply because I don’t want to forgo 3x Ultimate Rewards points or 4% cash back in favor of only 1x Membership Rewards points. It’s an unfortunate surprise. While any new launch will have both good surprises and bad, I hope Amex is able to get restaurants straightened out…while leaving good surprises alone.

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