We have been doing business with Amex for 5 years now and they always take 3 days. In our type of business that is a rope around our neck since our ticket items are over 1000 dollars.

Although I do agree that there are more clients making bigger purchases with Amex than Visa.

I called our Merchant support who went on to tell us that it was canceled but she was not at liberty to tell me why and that it’s in their contact that they can do so.

I later find out that it’s because we had a customer chargeback an $800 order where we had proof of address matching, delivery and even a signature from the customer because it was sent insured. Still American Express refused to reverse the call and we threatened to get our lawyer involved.

Now even if it’s acceptable to cancel a merchants account is it right to do so without warning and have us find out a week and a half later. We are trying to make a living and this is what they go and do to us. To top it off our lawyer is outraged because we have all the proof needed to show that the sale was a valid sale and they were scamming American Express yet they choose to still support the customer.

This is not over by any means but I am not sure we would ever use American Express again. Thats the way they treat their merchants????????

This is the year 2008, We are in the electronic age, Holding checks / credit card payments is a thing of the past. As of today my company will no longer accept American Express.

For example: If we had $1,000 of credit card transactions on a given day we would three separate deposits over the following days one for Visa/MC and then two, later deposits for Amex and Discover. This makes it much more difficult for us to reconcile our receipts… all because of the occasional non Visa/MC user.

We’ve seriously considered banning Amex and Discover.

So at the retail level for gas stations, it doesn’t matter if you pay with one or the other. The franchisee still gets their money and it’s tagged as ‘credit cards’ not with one card name or the other.

For individual stores, that’s a whole other business I guess. The main thing as I learned while doing some biz dev for my parents, is to shop around the credit card processing company. The fee schedule is radically different from firm to firm. You have to know your credit card usage volume by card and price bids accordingly.

And if you want no questions about money and fees, buy an ATM for $5-7K, put in a wireline and clearinghouse, and take cash only. There’s a restaurant chain in the area that does this. It drives me bonkers, but I try to plan ahead or just borrow cash from my friends when we go there. As much as it bugs me, it’s smart on their part! It’s a pure cash business!

Again, Amex pays out in 1 to 3 days.

Secondly, due to a federal lawsuit brought by the government against VISA/MC for pretending to operate as separate companies yet working together to prevent Banks from issuing Amex to their customers, merchants now have distinctly separate merchant accounts for VISA vs MC.

There are many misnomers as to why merchants may attempt to dissuade a customer from using a specific type of card, be it Amex, Discover, VISA, ets. Most of the merchants practicing dissuasion are basically “ignorant” of the statistics about card spending habits. Secondly, many do not understand how the card industry is segmented by retail, restaurant, lodging and then a multitude of charge volume tiers within each of these categories. Any variations in charge volume as well as merchant category will dictate the actual fees assessed by the card companies.

For example, a retail escablishment with merely $10,000 annual Amex charge volume may be assessed a rate as high as #.5% (hypothetically) whereas a retailer with $200,000 in Amex charge volume may only be assessed a 2% rate. The same applies within each industry category as well as across the board with all card companies.

There are two primary differences or distinctions that permit VISA/MasterCard to come in on a lower rate structure. The first component is what is called an interstate rate, the fee within the overall rate that is assessed for carrying the data across their network. The balance of the fee is their stated profit for simply being in business.

In other words, a VISA transaction may have a .75% rate (within the overall fee) for handling the transaction within the VISA network. A yet even higher interstate rate is assessed to the same merchant for running an Amex transaction across the VISA network. Of course this is pure gravy profit for VISA because it costs only pennies for them to hand the data off to Amex. Additionally, VISA/MC typically fail to inform the merchant that there is an alternative for the merchant. The merchant could set their POS device up to dial directly into the Amex network, hence, avoiding this extra fee charged by VISA. It is referred to as Direct Processing.

The second component affecting the rates (cost of doing business with card compamies) is the pay schedule. VISA/MC pay out in a typical two day turn-around. Amex pays out in a typical three day turn-around. Amex will pay out in as fast as 24 hours if the merchant wants to pay an additional fee (typically) about .50% higher. Also, if the merchant is processing Amex through the VISA network (remember they are now paying a higher rate for VISA to process the Amex transaction) then they are also seeing a delay of at least one day before they get their money from Amex. This is out of Amex’s control. Again, the merchant should be more conscientious in doing their homework before agreeing to process Amex through a VISA terminal.

Lastly, but most importantly, a truly savvy merchant will easily understand the statistics that are compiled within the card industry and can make their card acceptance policies with a more informed decision. Historically in almost every retail, restaurant, or lodging transaction, the Amex cardmember (merchant customer) spends significantly more per transaction that a VISA/MC holder. This is due to the demographics of the wallet and who the card companies are targeting as card holders. Amex typically captures a more sophisticated cardmember based on socio-economics such as income level, residency, spending patterns and other cards carried in their wallets. When I was sith Amex in the 1990s, they coveted the largest database of consumer spending in the world. They know how to select their cardmembers whereas VISA/MC will issue a card to anyone that breaths.

So, a savvy merchant will understand the following and appreciate the economics. Using hypothetical but realistic numbers…Typical retail scenario: Customer enters an establishment and spends 45 minutes shopping. Some of that time is spent taking up the employees attention, or maybe not. They walk up to the register and make a $400 purchase in one transaction and the retailer pays Amex 2.75% ($11.00) for that transaction. The profit for the retailer on a $389 net transaction may be 50% ($194.50)

Now, a typical VISA card holder comes in, spends 45 minutes and they walk up to the register and make a $150 purchase. The retailer pays VISA 2% (($3) and ends up with a net transaction of $147. The 50% profit on the transaction will be $73.50.

The question now becomes…which customer is more profitable for the retailer? Now, a defeatist attitude might say “Well, I’ll just convert that Amex customer to a VISA transaction and make a more significant profit still”. However, there are two variables that come into play here…

First, most shoppers predetermine ahead of time exactly how they intend to pay for their purchase (basing this on personal factors) so they therefore are selective about how much they spend and..where they spend. If an Amex cardmember sets out to make a $500 purchase on their Amex card (wanting the pooints or maone management features of the card) they A) look for the Amex sticker on the merchant window – no sticker could mean no shopping and B) then determine how much they are willing to spend based on the method of payment.

VISA/MC assign spending limits to their cards, Amex does not. This has a huge impact on cardmember spending and…their ability to spend and pay.

So, if they come to the counter and the merchant says “We prefer VISA or MC”, the customer has a decision to make: either put the merchandise back, spend less, or make the purchase through a method they had not originally planned on. Let’s say the retailer gets the customer to use VISA and buy the $400 of items. They may never see that customer again after that one transaction. Here is why…

How many of us want to be told how we are to make our buying decisions? What method of payment we must use, and possibly therefore how much we can purchase? Statistics say very few folks tolerate more than one instance of being dictate how to pay for their merchandise/food/travel, etc.

So, higher rates do not also translate into less profit for the merchant. The merchant does have options: Direct processing (lower Amex rates), and attempt to attract more Amex customers (due to their higher spendng abilities).

Iknow the above information may be difficult for some to swallow but the industry statistics speak loudly. VISA has been trying for the past 15 years to capture the Amex card market and turn these stats around but as long as a cardmember has the ability to determine their method of payment, earn and redeem valuable loyalty points (awards), receive cash back incentives, and use the Amex card as a money management tool, then VISA/MC have a long haul ahead still.

Hope this helps!

Oh and by the way – Amex does not charge a monthly merchant account fee – that may be coming from VISA or MC for handling the Amex transaction.