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Why Don’t Many Merchants Accept American Express?

Because American Express charges businesses higher fees than other credit card companies like Visa, Mastercard, and Discover, some businesses decide it’s not worth paying the extra money to accept American Express. Depending on the business’s size, its number of transactions per day, and its markups, some merchants decide to skip Amex fees and trust that their customers will have another method of payment, whether it’s cash, debit, or another credit card like Visa or Mastercard.


The next question is obvious: why does American Express charge higher rates? Especially when merchants are basing their decision to not accept Amex based on Amex fees. Banks that issue credit cards make money by charging interest on credit card balances in addition to the money they make on credit card fees.


American Express’s business model does not revolve around charging interest. Amex relies on their fees to make money. Many Amex customers use an Amex charge card, versus a credit card, which they pay in full every month, never incurring interest on a balance. Swipe fees and annual fees are the only opportunities for Amex to turn a profit with its charge cards.


Many of American Express products are not designed to generate interest and instead require their customers to pay in full every month. Charging high annual fees, Amex enjoys an affluent clientele that can pay the annual fees, as well as the monthly balance in full. Some merchants are willing to pay the higher rates to attract the bigger-spending Amex customer.


While Visa and Mastercard charge between 1.5 percent and 2.5 percent in swipe fees, Amex interchange fees charge merchants between 2.5 percent and 3.5 percent. And some small businesses calculate that they may not even make a profit while paying that extra one or two percentage points. Fees add up, and some merchants can’t afford the Amex fees eating into their profits.


The tide is turning according to the Nilson Report, a major credit card industry resource, which found that 10.6 million U.S. merchants accepted Amex by the end of 2019. 99 percent of U.S. merchants that accept credit cards say they accept Amex. This brings Amex customers closer to an end of worrying a merchant won’t take their Amex card. In addition to restructuring the fees, Amex is also growing in popularity with small merchants with their OptBlue program, which offers lower rates for merchants who sell less than $1 million in Amex volume annually.


Amex customers choose their card for the incredible rewards. In addition to earning points, Amex customers enjoy free flights and hotel stays. The annual fees end up coming out in the wash.



Make sure your merchant services provider goes out of their way to educate their customers so that they fully understand pricing for Amex, as well as their pricing model in general. Having this knowledge is important to ensure you aren’t overpaying. If your business wants to explore accepting Amex cards, choosing a good merchant account provider can help you make a decision regarding Amex or any other aspect of merchants services. That way you will have everything you need to make an informed decision!


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