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Why Do Merchants Dislike American Express?
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I like my American Express True Earnings Costco card because it gives me 1% cashback, no cap, on everything and 3% at restaurants (though that was trumped by my Citi mtvU card with 5%) and 2% on travel. It’s my backup card when another one doesn’t supersede it (like the Citi mtvU card) with a better offer because the cash back from American Express doesn’t have an annual cap whereas other cards do. However, if you’ve noticed, American Express (and Discover) seems to always been the odd card out when you go to a lot of merchants and while I’ve always heard it was the fees, I wanted to dig a little deeper to find out why Amex was so hated.
According to the North Carolina Office of the State Comptroller and this Schedule of Fees document, a $100 transaction on a VISA card results in fees of $1.62. MasterCard clocks in at $1.80 and American Express comes in a $2.19 (this is for the “best government rate,” whatever that means)
How does this compare to someone like PayPal? If you have their lowest merchant option, sales less than $3,000, you’re looking at fees of 2.9% plus 30 cents. So on $100, you’d be paying $3.20; more than Visa, MasterCard of American Express. (If you use Google Checkout, it’s fee free until the end of the year)
Anyone know why merchants hate American Express (and Discover)? Is it just the fees?
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Our sales are around 1200.00 to 5000.00 per transaction with AMEX. In the last 4 years we had 2 chargebacks back to back. We sent our client signed invoice copies and other proof to support our claim against the chargebacks. One was an unauthorized charge (BS) and the other merchandise issue. We are still waiting for their answer but we are going to sue these cardholders if need be. We are not going to be out this money. We will become their worst nightmare if need be. We are not going to be defrauded. AMEX will be sued as well.
Paypal charges 3.5% on every AMEX transaction. You must have at least 10k in sales per month to acquire 2.2% per transaction for other credit cards (plus $0.30 per transaction). Then when you get into all of the “specialty” cards where customers are getting milage and whatever else, you are paying high rates for them too with most companies. Paypal is one of the few that charges a simple rate. Our company no longer accepts AMEX cards due to their high fees.
I think its very dumb for any merchant to not accept AMEX. If AMEX is the only option for me, because my company provides me with only AMEX, you are angering customers like me, and I hope you go out of business. Why just not say “Amex customer will have to pay 2% premium due to AMEX policies. Sorry.”
I’ll be perfectly OK with that. Is it really so hard? I guess if you’re a dumb merchant, then yes.
you can’t charge a different price because of the credit instrument used. That is illegal in most states. So not necessarily dumb merchants, but I agree the half percent difference in most cases shouldn’t stop them from accepting them. They do loose business that way. Some places can charge a convienence fee for all credit used, but it usually has to be the same fee for everyone then.
American express wants a monthly fee of up to 33$ just to use their service as a mercant. they also want .30 if you have a call in or internet customer. to high. So is paypal to a mercant
I can’t speak for other types of businesses, but if you are in a business that does a low profit to volume of sales, like a restaurant/bar, the extra half percent can make a huge difference. For a small mom and pop operation, not taking AMEX can save $2000 or more a year.
One reason merchants don’t like AMEX is that there is a group of people out there that use their American Express card as a tool to get everything free. I recently sold a customer over $4,000.00 worth of bedroom furniture. When the furniture arrived the headboard was damaged. Fine all you have to do is order another one. This was not good enough for this scam artist. He disputed the charges for the entire bedroom because he had to sleep on a mattress and boxspring causing him “extreme duress”. Not only did American Express go along with this bullshit. He also disputed charges when the replacement headboard came saying it took too long. He accepted the merchandise but disputed the charges. American Express for many people is nothing more than a plastic license to steal. The worst thing is AMEX allows them to do this.
Why would an honest company make their employees only use AMEX?
I travel for the benefit of my company, not me, why make me hunt down merchants that take AMEX when I’m tired, hungry and out of town?
Think about it.