Merchant Account with American Express

There are four major credit and debit card issuing companies in the US who have made a name for themselves. Of these, American Express is one of the most famous. It is also one of the most expensive regarding processing fees. Because of this, many merchant account providers have separate markups with regard to pricing for American Express cards, while some of them simply don’t offer support for payments made with these cards at all.

Even at present, the credit card discount rate on American Express card payments is over 2.5%, which is hugely different from Visa and MasterCard, both of which have below 2% in discount rates. The pricing model for fees incurred by using a payment gateway that accepts American Express with your merchant account is a little more complicated than the same model for other types of credit and debit cards.

Typical American Express Fees

You are typically charged:

1. The Card Acceptance Fee – This is charged to your business by American Express in one of two ways – as a discount or flat rate plan. The discount rate is simply a percentage of each transaction that is deducted from the transaction while it is being processed. With AmEx, this fee is over 3.0% for many industries including fast food. If the AmEx card being used wasn’t issued within the US, and this card is used at your location inside the US, you are charged an extra 0.4%. The flat rate of $7.95 each month is charged to you instead of discount rate if you ask for it. The fixed rate is typically better if your business has a sales volume below $5000 a month. If you exceed this amount in transactions in a month, all future payments will be accepted on the discount rate plan.

2. Authorization Fees – These are all charges that are applied outside the standard point of sales. Gateway fees, for example, are the charges applied to the transaction if American Express doesn’t issue the payment gateway used to process the request. This is usually a tiny number. Another fee (0.30%) is charged if your customer makes their purchase at your store online without swiping their card into your system.

3. Other Fees – These include the check fees for any payments made using a check at American Express, a statement fee if you should choose to receive your monthly statements in print on paper, and a fee for lack of compliance with technical specs enforced at AmEx.

4. Security Fee – If you have an American Express card acceptance system, you are responsible for the security of the customer’s data. If there is an incident which puts this security at risk, you may be liable for up to $100,000 based on the severity of the incident.

Choosing a Merchant Account with American Express

You have to think carefully before you decide to accept AmEx cards at your store. In the US, most banks issue cards using Visa or MasterCard as the provider of the credit or debit card. American Express has a significant portion of the market too. Think about the target market for your business. Is it a demographic that will use AmEx credit cards, or do you think it will be more focused on Visa and other brands that don’t cost you nearly as much per transaction? When picking a merchant account provider with American Express, should you decide to do so, you have to consider all your options.

There are companies out there that provide merchant account services to businesses of all shapes and sizes. Most of these have a very transparent pricing plan when it comes to their costs to you. Make sure that all the companies you review lay everything on the table, so you won’t have any nasty surprises when your statement arrives in the mail. With so many small businesses choosing to ignore AmEx as a form of card payment, you might be securing a competitive edge by allowing your own business to use this credit card.