It’s no secret that some businesses avoid accepting American Express credit card consumers. With the vast majority of point-of-sale transactions accepting credit cards today, consumers sometimes wonder why they can’t use their American Express card in some establishments. The explanation is quite simple - the merchant fees may seem too high, especially for small businesses.
American Express makes its money from these credit card processing fees and annual fees. Other companies like Mastercard and Visa also have fees, but are generally lower since they offer debit cards as well and can take advantage of other sources of transaction fees. Accepting American Express is a tough business decision to make, but here are some points to consider.
Be Aware of Merchant Fees
American Express merchant fees are generally 3% or higher, while other companies charge 1-2% on average. Small businesses usually opt for the cheapest payment systems, since they are operating on a smaller margin per sale. Even the tiniest percentage can make a big difference in profit margins, so business owners have to crunch some numbers to determine whether it’s worth it.
Programs Through American Express
American Express offers two different programs for merchants: American Express Direct and Opt Blue. The Opt Blue program is ideal for business owners, but there are some qualifications to meet. If your business qualifies for Opt Blue and the processor you use is qualified to place you under the program, then you will enjoy the benefits of getting the same pricing as other credit card brands. The American Express Direct program is for businesses that don’t qualify for the Opt Blue program for any reason, and are therefore subject to the higher pricing model. In most cases, it’s worth your time as a business owner to see if you quality for the Opt Blue program.
Consider Your Profit Margins
Speaking of profit margins, this is usually the number one concern for businesses. If you sell big ticket items with a high profit margin, then you may want to bite the bullet and pay the higher credit card processing fees with American Express. Millions of consumers are using American Express for various reasons, and many of these are wealthy consumers. As a business owner, you have to determine whether it’s worth potentially losing a sale simply because you don’t accept American Express.
Think About Customer Satisfaction
One of the most frustrating things for consumers is hearing the words, “I’m sorry, but we don’t accept American Express.” Sometimes it’s frustrating enough for them to change their mind about the purchase and never come back to the store again. Other consumers will simply pull out an alternative card and complete the transaction. The bottom line is you have to do what your customers want in order to keep them coming back. It may cut into your profits slightly, but it also could be a great investment in the long-run.
Every business has to make their own decision whether it’s worth accepting and paying the higher fees with American Express. At Precision Payment Systems, we work with merchant accounts for small businesses in New Orleans and surrounding areas, and understand the challenges business owners face. We offer solutions for payment systems in a variety of industries, ranging from retail to medical to e-commerce. Be sure to contact us if you have any questions about payment systems or to find the best solution for your specific industry and business.
