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Q: I always wondered why some small businesses do not accept American Express. Is there a high fee for businesses to accept these cards?
A: The fee for American Express is estimated to average about 2.9%.
This means that for every $100 purchased on an American Express card, the merchant has to pay out $2.90.
This is the highest rate of the four major credit card types. Although it may not seem like a lot, in some industries the profit margins are only a couple of percentage points. So accepting an American Express card could eat up the company’s entire profit.
On the other hand, if a company doesn’t accept AMEX cards, it may cause some customers to shop elsewhere.
The percentage rate American Express charges differs from industry to industry. If you visit their website, you can find the different options they provide for merchants. You, as a merchant, have the option to choose between a flat fee of $7.95 per month or a percentage of the purchases (which they don’t list). Only some merchants will qualify for the flat fee.
There is one more drawback to accepting American Express cards.
American Express takes a bit longer than Visa and MasterCard to get your money to you. Visa and MasterCard take about 2 days. American Express usually takes two days. However, American Express takes about 3 more days if the payment is sent through the Visa network (for a total of up to six days!).
American Express does offer an option to get your money quicker, but you have to pay extra.
So, for merchants who usually purchase their inventory in advance, waiting almost a week to get some payments makes it hard to keep up.
Between higher fees and longer wait times, it is no wonder that some merchants eschew accepting American Express cards. Regardless of their popularity.