Why Some Merchants Don’t Accept American Express

Mariel Leibowitz

By  Fri Sep 27, 2013

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“Sorry, we do not accept American Express.”

These are seven words I hate hearing. If you’re a loyal AmEx user, you’ll agree. It’s frustrating when you want to pay for something but you can’t. All of this drama because of what? Merchant fees?

An analyst at American Express explained the inner workings of a relationship between a small business and American Express.

He started off by telling me about the card’s discount rate — a fee paid by merchants to credit card processors. This is the fee that small merchants are always trying to avoid.

American Express has a discount rate between 2-3 percent. Based on how large the merchant is and what type of business it is, American Express will determine their fee, which will be locked in by a contract.

This rate is not necessarily higher than other credit card companies. The analyst at American Express pointed out that a lot of merchants are confused when it comes to debit and credit rates. When merchants accept cards such as Visa and Mastercard, but the customer chooses to use their card as debit, the transaction has a smaller discount rate, usually one percent. Merchants see the one percent on their statement and assume that they’re paying less with those cards, but they’re not. AmEx can only be used as credit, which results in merchants only having to pay one fee.

American Express has an annual purchase volume of $888 billion. To me, it doesn’t make sense as to why small business owners wouldn’t want to accept the card.

“American Express cardmembers are willing to spend more and be more loyal to their cards by only going to businesses where their card is accepted,” the Analyst stated.

To see if small businesses actually found it beneficial to accept American Express in their establishments, I spoke with two people who run a small business in the Los Angeles area. I sat down with Matt Wise, general manager of The Roger Room, a cocktail lounge. “It’s really worth the small fee,” said Wise.

He agreed with my feeling of astonishment when retailers won’t accept AmEx cards. “I prefer when it is easy to exchange goods and services. Any friction in the process can detract from the experience itself.’”

Lillian Cavalieri is the founder and CEO of iPrecinct LLC, a political data technology company that provides campaign software to enhance overall quality of game strategy. She also happens to accept American Express and enlightened me on just how beneficial it can be to have this card on your side from a business owner’s standpoint.

“We have way more sales using American Express. Thirteen percent more,” said Cavalieri.

In fact, Cavalieri said customers would frequently ask if iPrecinct accepted American Express, to the point where she put up an icon on her site notifying the public that they do take it.

She also informed me American Express is excellent when it comes to discrepancies. She said if there is an issue between the business and the customer, American Express will resolve it within 24-48 hours, unlike other cards that can take two to three business days to fix the problem. This allows Cavalieri to deliver faster service, which is key to a business that is built on delivering data quickly.

The source at American Express said the number one customer complaint is why a merchant will not accept their card. Once this happens, American Express will actually call the merchant to find out why they don’t use them and to see if they will start.

(Disclaimer: MyBankTracker was not compensated from American Express for writing this article.)

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Add Your 2 Cents

  • james m

    My personal experience in the bankcard/merchant services industry allows me to attest to the extra hurdles required when working with AMEX. Nobody will probably ever read this and im not talking down of AMEX. I always saw it as their unique approach to being a card association. Rates always vary depending on the iso or signing agent. From my observation, higher scale places primarily use amex. Another thing that determines rate is how the transaction is processed. It can be done through the merchant services one is contracted with or have an amex acct directly.

  • Mike

    Now we know why the sponsor small business Saturday!

  • Joe

    I am a merchant and I DO NOT accept American Express!! They charge way too much, and they take their time to pay!!! I have not lost a single customer either, as customers always have Visa or MasterCard.

    • Mrs. D.

      Maybe you just don’t realize you are losing potential customers, like myself, for one. When I find a merchant that does not accept Amex I may shop once but I guarantee you I will not be back. Like the post said Amex users are very loyal. This included the merchants we choose to frequent and believe me WE LIKE TO SPEND! Why wouldn’t you want my business?

      • jhouser

        Agreed, I often get to the signage on the building that shows what they accept If you don’t accept Amex I don’t even come into your building so why would you even know you are losing my business?

    • BNB

      You are definitely losing business. AMEX holders are notorious for not shopping at places where their cards are not accepted. Me included.

      As a business owner myself, I can tell you that the fees are trivial compared to VISA/MC/DISC, but that AMEX customers tend to spend substantially more money – as in 35% more. AMEX is the #2 card used behind VISA at my business, more than MasterCard.

      Not taking AMEX is extremely foolish.

  • Jenny

    As a small business owner, we are currently accepting all credit cards, but we’re contemplating dropping AmEx. I have clients that use multiple cards and I would not be worried about them not coming to me if I did not accept AmEx…..most people have multiple reward cards. Yes, the discounts and rates and fees once you break it all down by company is probably nickels and dimes (AmEx is always higher though) – HOWEVER – Visa, MC, & Discover drop into my account next day and AmEx takes 4, sometimes 5 business days. This makes a big difference for my company while we are struggling right now and depend on funds being available in the account. I’ve noticed too that many of my clients that had previously used AmEx, have now switched to Visa or MC accounts – either because other companies don’t take it or maybe better offer? Not sure, but AmEx is used in about 1/4 of my sales and the majority of those people have other funds available to them….they are merely collecting rewards and due to our local reputation, I don’t think they would shop elsewhere just because we didn’t accept AmEx (we have an upholstery shop and are one of the few in town that actually accepts cards to begin with – most are cash/check only).

  • Gustavo

    We are a small merchant and we considering taking amex of our payment system. It take longer than other CC companies and sometimes “they loose” the payments.
    Also they charge MUCH more than other CC.
    I am already started to say no to AMEX and I will cancel the contract with them.

    • Oyee

      I have taken AMEX at my Auto Repair business for over 25 years and I am absolutely convinced that taking AMEX has helped attract business. It does take a couple days longer for my money to reach my account but I know for a fact that there are curtain customers that will go elsewhere if I were to stop accepting AMEX. I am in Utah and in recent years the state has allowed us to charge a “convenience fee” for credit card transactions. So I now have a sign on the entrance desk that says “there may be a 2-3% convenience fee if using a credit card for payment”. For some reason we have had a higher amount of cash transactions in the last 2 years.

  • http://billcollectorshateme.wordpress.com/ Bill Collectors Hate Me

    I like the fact that AMEX is not accepted everywhere because it minimizes my purchases with the card. It’s a win-win for me!