The American Express Card is one of the most prestigious credit cards available in the marketplace. This card tends to attract affluent cardholders who have a tremendous amount of buying power. Despite the image that is associated with this card, many merchants have opted not to accept the American Express Card for credit card processing.
Merchants are in business to generate revenue and maximize profit margins. In an economy where profit margins are slim, merchants implement cost-saving measures in order to survive. Although businesses would like to offer the American Express Card as a payment option, the transaction fees are cost prohibitive.
Accepting any card for credit processing is an added expense for the merchant. For each transaction that is completed, merchant accounts are charged a fee by the issuing card. For example, MasterCard and Visa typically charge from 1.5% – 2% per transaction. American Express assesses merchants from 2% – 5% per transaction.
Businesses can save thousands of dollars per year by opting not to accept the American Express Card. From a financial point of view, it makes perfect sense to accept cards with lower transaction fees.
Another reason that merchants shy away from accepting the American Express Card is their generous chargeback policy for customers. A chargeback occurs when an issuing bank returns money for items that were purchased back to the customer because of a dispute.
Many merchants have found that American Express has a chargeback policy that favors the customers at the expense of the merchants. There have been instances where merchant accounts were damaged by the effects of chargeback fraud. As a result, merchants tend to be fearful of losses that are likely occur because of fraudulent chargebacks.
Furthermore, American Express immediately refunds the money to customers. Merchants have complained that they are not afforded the opportunity to dispute the claims. This unilateral decision puts merchants at the mercy of cardholders and persons who commit credit card fraud.
American Express prides itself on stellar customer service. In order to retain its affluent customer base, the company has a business model that shows loyalty to the customers without considering the impact on businesses.
Although American Express is working to create policies that are friendlier to merchant accounts, many businesses are not able to afford the expenses associated with accepting this card. It is very likely that these businesses will continue to refrain from accepting the card as credit card processing method.