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?

{ 128 comments, please add your thoughts now! }

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128 Responses to “Why Do Merchants Dislike American Express?”

  1. Steve NYC says:

    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.

    • tina says:

      I read your post from last year and wanted to know how it went. We are in a similar situation now and have a lawyer, but AmEx has thrown us to the wolves and is letting this guy essentially steal from us. Just curious how it worked out. We are out 20K now, that AmEx has taken from our corporate account.

  2. Niknak says:

    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.

  3. Asdf says:

    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.

    • RSM says:

      You can not arbitrarily assign a charge to a card. The cc companies forbid it and can cancel your ability to process with them. If you’re in business why is this news? Take ur expensive card some where else. No body will miss you.

    • Asdf,

      Everyone in this discussion would appreciate it if you treated your fellow professionals with due respect and refrain from taking this discussion personal and insulting merchants that resist acceptance of American Express. More and more businesses are making their credit card option decisions on fees and chargeback loss risk. It is not your place to talk down to merchants and demand that your favorite card in your wallet be accepted. To learn of best practices of card acceptance for merchants, please read on.

      The facts of the matter are that chargeback loss and American Express rates can create significant margin loss for merchants and many work off very slim margins thereby making the margin loss unacceptable. As company owner of Computer Upgrade King, my decision is to surcharge for Discover (which does not forbid adding fees) and refusing to accept American Express. I am 100% protected against unauthorized transaction chargebacks both domestically and internationally for MasterCard and Visa transactions because I use 3DS offered by Cardinal Commerce (also used by NewEgg, TigerDirect, B&H, Dell, Ritz Carlton, etc..). However, for Discover and American Express, I am faced with risk of chargeback and the need to verify all Amex and Discover orders by calling the customer on the billing phone number and also calling the issuing bank to make sure the charge was authorized. I estimate that I lose at least 1% additional margin with the labor hours expended on credit card verification and also the chargeback losses.

      American Express poses two signicant issues for which many merchants myself included will always refuse to accept. First, Amex fees are at least 1% higher than the other card issuers (1.3% higher fee for Amex on Paypal Websites Payments Pro) and also they are known for favoring the consumer far too much at the expense of the merchant in chargeback disputes resulting in higher risk of merchandise and unauthorized transaction type chargeback loss for the merchant than with other credit cards. American Express forbids merchants to charge higher fees for Amex and also merchants have to accept higher risk of chargebacks accepting American Express. Some would say costs can easily approach 3% more with the acceptance of American Express due to the higher fees and higher risk of loss due to chargebacks.

      Now I am sure anyone reading this wishes to learn more about unauthorized transaction chargeback protection for Visa and Mastercard domestic and international transactions as this is fairly new stuff. As far as MasterCard and Visa are concerned if you have Chase Paymentech, First Data or another processor with Cardinal’s 3DS (note Paypal Websites Payments Pro does not support 3DS except in UK at this time), then you will eliminate the risk of credit card unauthorized transaction chargeback as long as you follow the rules (auto blocking for domestic MC & VS, international blocking for VS and protection availability disclosed for MC international). The unauthorized transaction chargeback protection is complete in that the liability is shifted to card issuer with full protection for the merchant with liability of loss due to fraud shifted to card issuer regardless of 3DS enrollment by card issuer and/or consumer. Visa and MasterCard rules are now mandating that the card issuer accepts liability regardless of enrollment so long as the merchant is enrolled and their checkout’s API has Cardinal Centinel 3DS installed. Just so you are clear, chargebacks for only the unauthorized transaction codes are covered. These types of chargebacks are blocked altogether for Visa international and domestic and Mastercard domestic. For Mastercard international, 3DS protection eligibility is disclosed and if coverage is not provided for a particular transaction, then the merchant is within their rights not to accept the order. Should a chargeback occur for Mastercard international for which the merchant has 3DS protection, they would simply only need to print the data elements displayed on the Cardinal Centinel reporting UI as their response to the chargeback and pay the $5 settlement fee as the chargeback would automatically be decided in their favor.

      I hope after this discussion all readers understand now why American Express and also sometimes Discover are not accepted and why it is within the merchants rights to not provide these payment options. Merchants do need to understand that by not providing some payment options, some business will be lost. However, if the merchant decides the margin loss due to additional fees and chargeback risk deems acceptance of the card too risky, then I certainly understand and support their decision to not permit that card as an option to their customers.

      • Anonymous says:

        We live in a country where businesses get all the gains; we live in a country where businesses come first, not the people. So I suggest you shut your mouth because merchants are nothing without the demand; they are nothing without the real job creators (the consumer). The USA has gone down a dangerous track the past few decades and that is the reason why other countries are experiencing higher growth rates, mortality rates, better healthcare and education. Boohoo, oh poor business owners my ass. Unless you are a leader of a really small business, I do not give a crap. We gave businesses deregulation over the past 3 decades and look where it got us. Get that damn chip off your shoulder and understand that the consumer is the job creator and should be adhered to, not the business owner.

    • Juan says:

      “I hope you go out of business” thats a stupid thing to say. That means alot of people whod go out of bisnes alot. I never got people using AXP at my shop sometimes none but i still had to pay a fee every month thats why i dont accept it. So AMERICAN EXPRESS are the bad guys taking money from my small buisnes. We dont hate the people using AXP, we just hate it when people use AXP.
      Thats why people dont accept it and its my whay of protesting.

    • LLL says:

      Asdf and Anonymous,
      You 2 have spoken like true ignorant consumers! CONGRATULATIONS! It’s ok though, there are many out there like you.

      No shit businesses get all the gains?!? WTH kind of comment is that? Do you take all the risks from a business you’re buying from?1? NO you Don’t! So you, shut your mouth!

      If you were ever a business owner or had experience with AMEX as a merchant, you’d know that AMEX is a pain in the ass to deal with.
      To put Mr. Robinson’s post in shorter terms, AMEX is more expensive then other CC and sides with the consumer on charge backs.

      During the 3 years we accepted AMEX, we averaged 1 charge back a month, that we lost.. With Visa and MC combined, we averaged 2 a year that we usually won and yes, 1 charge back a month is a big deal.. 1 CC invoice for us can range anywhere between $500-$10,000.

      99% of customers that try to pay with AMEX have a MC or VISA that they use as well. Tell your company to get smart and pick up another CC.
      I’d rather lose your business then lose $5000 worth of merchandise and $5000 in cash..

    • Anon says:

      It’s against the merchant-card agreement to charge a premium to people using the card.

  4. jd says:

    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.

  5. Banks su.....k says:

    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

  6. vj says:

    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.

  7. Danny says:

    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.

  8. george says:

    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.

  9. AMEX User says:

    AMEX treats their customers right and protects them from shady business dealings of retailers. Retailers don’t want to pay an extra twenty five cents or thirty dollars per month, which is BS. In all reality, if you don’t accept AMEX, those of us who do hold an AMEX are more likley to understand who you cater to in general.

  10. Kim says:

    I just came to this website by googling. I have a business and pay a flat rate for all the other cards to my card processing company. However, the minute I use an AMEX card I have to pay an additional fee. To a small business this IS high. The business is improving but it has not yet reached a profit stage, so, yes, AMEX is too much. I feel it’s a rip off.

  11. John says:

    I have a small business and like many others discouraged amex use by customers. The difference between AMEX and MC/VISA is a full percentage point higher. I recently found a program that for small businesses that alows a merchant to accept AMEX for a flat fee of $5/month until sales reach $5000.
    Call AMEX and ask for this service

  12. Vick says:

    I have had the worst experience with AMEX as a merchant of any business I have ever worked with. I had a client ask to charge $20,000 for services forward. This was approved, but then Amex decided it was not valid for the type of service we offered and did not settle the transaction. However, they still billed me the $578 fee and kept every penny of it for doing absolutely nothing. This was one of 2 transactions that I had with this company before canceling it on the spot. I feel like this money was stolen from my business. I would not recommend AMEX to anyone, and I take every other major credit card. Have never had a problem with any of the others in the 5 years that I have been accepting credit.

  13. Tery says:

    AX is still the same they support the client and not the merchant. I closed may account with AX anyone can lie and they support them that’s it. That’s not a policy, that’s highway robbery. So I changed bank and got rid of them. They were not going to debit my account. They can do the work and see them in court if they want. Judges look at the sale, the contract, emails, all of it. Not just the word of the credit card holder. Service industries should not accept AX bad for business. You can be out thousands of dollars.

  14. Susan says:

    Amex is and always will be my card of choice. Visa and Mastercard do not give a crap about the consumer. Amex is a great company because they stand by and protect the consumer, so I can understand why merchants don’t like them. There may be people out there that use Amex as a tool to get things for free, but from my own personal experience there are many dishonest merchants out there as well. One that was even so desperate to win a dispute that he forged my signature.

  15. Anonymous says:

    Merchants don’t like American Express because they take out a larger percentage of the money per transaction than Visa or Mastercard, which is especially bad on low margin businesses. They also hold the money that they submit to businesses for a longer period of time than Visa and Mastercard does. When you use your Amex card you are essentially paying less and giving the payment to the store a week after you bought the item. While stores like the business if they had a choice they would not accept Amex overwelmingly.

  16. oldavey says:

    I too have an AE Costco card. I’ve always known that smaller merchants take it on the chin from AE purchases. To support small or local merchants I always use my MasterCard, and save the AE for the national big box stores who can afford AE’s fees (heavily discounted I might add). The main reason I use AE for larger typically electronic purchases is their free extended 1-yr warranty. MC doesn’t have a consistent policy on their extended warranty, it kind of goes by who the card issuer is. FIA/BoA issues my bank’s (and just about every other bank’s) card and is VERY vague about the extended warranty. AE’s card benefits are very straight forward, but again I only use it for the big stores and purchases. Fyi, their cash rewards can only be used at Costco so that’s a real downer.

    • tony says:

      this is really helpful as a view of consumer, thank you for your advise

    • cooper says:

      I too have an Amex from Costco and use it for all that I can. Having read these comments, I will only use it for the larger stores and use my Visa for truly small local stores.
      BUT FYI: The Amex ‘cash rewards’ check that arrives in February/March can be cashed at Costco for cash. You can take this cash with you anywhere. That is what we have done for the last several years; we use it for something special.

  17. 4playoffroad says:

    amex charged back over $14,000 to my business because i installed a motor somebody else built and the front cover cracked (which was an original engine part)causing the engine to lose all its oil. I told the customer that it wouldnt be covered under warranty because it was an original engine part… in turn he called amex and they gave me 5 days to write an explanation and get it back to them. i emailed a copy,faxed a copy,and sent letter certified mail. they didnot accept the fax or email and due to our remote location the letter didnot get there in time so they did the chargeback no questions asked. the customer then took the truck to another business and paid to have it fixed there instead and is driving the truck around with thousands of dollars worth of new parts on it. my lawyer is not helping me at all,i feel, and i need additional help… AMEX is the worst card in the world and will recomend no merchant accepts it and no customer use it!

  18. Jon says:

    I’ll tell you why. I sent ONE AMEX card through my machine last month, it was the first one I have done in a long time, and I guess my merchant company no longer processes for AMEX. I’m in a very small town and don’t do a lot of cards anyway, but I never feel like I’m getting screwed by Visa/MC/Discover, however, the fees for that ONE transaction charged to me were just over $21.00 on a $157.00 sale. That’s rape. I’m sorry but my AMEX customers are going to have to use a different card from now on, I am calling them this week and cancelling them out. This is a sale that I would have made about $45.00 on, but because it was AMEX, it took almost half my profit. AMEX can suck it, they’re nothing more than thieves in my opinion.

  19. David Neuman says:

    We rented a video conferencing system to a customer and they used AMEX. Customer tried to chargeback first time claiming that we did not give tech support to them. We won because our invoice never showed we were doing a service like tech support but a product rental. Second time customer tried a charge-back again, stating that they did not receive all the cables to properly set up the video conferencing equipment. We disputed the charge-back with the customer and won showing that we not only sent all the cabling but more than was required. Then customer did another charge back indicating we never supplied tech support and did not receive all the cables. Well we sent the exact same documentation to win the first two claims AND unbeknownst to us, because we were doing reconciliation on our accounts we found out that they approved the chargeback on the same grounds they denied it before!!! We did not know about the charge-back at all. No one ever notified us from AMEX or the Merchant account. The Chargeback occured in December last year and they say it is final. We are demanding a notice as to why it went through since the denied the chargeback to the customer on the same grounds now that they approved it. We can not get either the Merchant Account or AMEX to send us over the last two months, any reason why they denied it. Neither is co-operating. And, now I hear today that they are denying it because we did not furnish any signed document stating that the customer signed for this rental!!! The never requested this information anywhere and we did never have to supply it , but certainly could if asked. So now we are ready to sue these folks. We don’t know where to go. But AMEX just does not care a bit about the merchant and that is why a lot of merchants do not do business with them. We will sue for punitive damages as well since they have unilaterally never gave notice to us and 100% changed their minds on the exact same issues that they have sided with us in the first two claims. Does not make any sense. AMEX IS BAD FOR BUSINESS.

  20. Tyler says:

    I work in a local pet shop and we do not accept amex. After 3 years of working 40+ hours a week I have never lost a sale because we do not accept AMEX. Our customers with AMEX understand why we don’t accept it and are happy to pay in cash in order to help out the local economy.

    Unfortunately not everybody agrees, and some people feel small mom and pop specialty shops need to accept such high credit fees on items they can barely mark up, and then when the businesses go under they blame the recession rather than their own greed.

  21. Amin Husaini says:

    AX is the worst company. I as a merchant had a customer who purchased jewelry for 550 dollars using AX. It was a swiped transaction and the card was physically present. The customer disputed the charge and AX took 550 dollars from my merchant bank account. What I did was, went ahead and disputed 550 dollars as an authorized withdrawal, so my bank deposited the money again and I went ahead and closed the account and closed the AX. So I took my 550 dollars back.
    thank God

  22. sola85 says:

    i just got an Amex card in the mail and after reading the comments im getting the feeling i got the card for nothing i have a visa / mc / and discover card too though but is there a list of store etc that take the amex card ?

  23. Gigi Rodriguez says:

    As a merchant point of view I think is all about who you use when processing the card. Using I do not have any problems accepting AMEX.

  24. Megan says:

    I can’t speak from a business owner’s perspective, but here is one from a worker’s.

    I work for a company where I get an average of three disputes per week on transactions (or people threatening to). This is for a valid service that they signed up for (sometimes years ago) and that they have used. Almost all of them are American Express (I am yet to have one from another company in almost a year), and user’s don’t care that they simply forgot to cancel- it is our fault. They are rude, like insulting the workers, and then just take the attitude that it doesn’t matter that they forgot, they can just “dispute it”.

    If a merchant provides a valid product or service they should be paid. Payment shouldn’t be taken back just because you feel like it. Chargebacks should be for fraudulent transactions and defective merchandise, not “Ooops I forgot to cancel”.

  25. Auto Shop Owner says:

    I decided just today to stop accepting American Express.

    I have been doing business for over 23 years, and have always taken American Express as a form of payment.

    Over the years, I have never had a chargeback from AX… Mostly because I run an honest shop and any issues are handled properly and professionally.

    AX fees have always been higher, and when I charge $16.95 for an oil change, AX payment wipes out all profit, and actually goes into the red. Oil changes are an auto shop’s loss-leader so we rely heavily on building a customer base built on trust and honestly.

    Sometime last year, AX processing was a day behind my other cards. We’d batch out at the end of the day and receive payment from the other CC’s within 48 hours (usually a 2 day turnaround). Amex is always a day late, and I’ve accepted that because “they use a different process than Visa/MC”.

    Now they are taking 4 days to pay. And, unlike in the past, weekends do NOT count as a day anymore.

    I got off the phone with an arrogant rep from Amex who stated “We are not a bank, and we apologize for the delay in receiving settlement funds, but there is nothing I can do about it”. I explained that the fact they weren’t a bank should result in FASTER settlements, not slower. And I pointed out the fact that even one day of interest on the millions of dollars they haven’t settled creates HUGE gains in Amex’s coffers, it hurts the merchants to have to wait for a big ticket sale to get settled.

    I have officially stopped accepting Amex as of today.

    I just rang up a customer who presented her Amex card, and completely understood why I no longer accept them. She then pulled out her Visa card.

    The more merchants who refuse to accept the obvious over-charging by Amex, the sooner they may realize how bad the problem is.

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