Why do merchants not take Amex?

[tontoro]

As card fees are now capped, is Amex actually more expensive for the merchant than Visa? If so, how? If not, why do so many places not take Amex?

[PeteM]

You may find this interesting: https://startups.co.uk/payment-processing/credit-card-processing-fees/

[JDB]

It’s only the interchange fees that are capped, not merchant fees. When challenged Amex will very often match whatever rates the merchant has with VI/MC but Amex still operates via a different system, is slower to pay and pays net of fees (although they will ultimately pay gross) which makes reconciliations a real pain. It’s almost as much about the admin being a real pain as the fees. The landscape has changed considerably with the advent of all these handheld card terminals that offer a (high) flat rate for all cards including Amex. The result is that Amex is gaining lots of new people who take their cards but they are smaller merchants like market stall holders while they are losing more traditional merchants.

[davefl]

You’re confusing interchange fees between banks and CC companies and the fees that the retailer pays to their CC provider. Amex aren’t subject to interchange fees as there is no third party involved.

Amex fees to the retailer are higher then MC/Visa

https://www.psr.org.uk/our-work/card-payments/the-ifr-and-merchants/

[tontoro]

I see. So why do we read on here people (maybe Rob?) saying things like “Amex UK can’t offer the same benefits as Amex in the USA, because their fees are capped and so can’t afford it”?

[JDB]

tontoro wrote:

I see. So why do we read on here people (maybe Rob?) saying things like “Amex UK can’t offer the same benefits as Amex in the USA, because their fees are capped and so can’t afford it”?

Because there are lots of other people in the credit card food chain between you using your card and the merchant getting the funds. The big one is the ‘merchant acquirer’ – people like Worldpay. The slice Amex gets to keep is capped. Barclays issues cards and also acts as a merchant acquirer (ie operates/provides terminals).

[tontoro]

JDB wrote:

tontoro wrote:

I see. So why do we read on here people (maybe Rob?) saying things like “Amex UK can’t offer the same benefits as Amex in the USA, because their fees are capped and so can’t afford it”?

Because there are lots of other people in the credit card food chain between you using your card and the merchant getting the funds. The big one is the ‘merchant acquirer’ – people like Worldpay.

Do these people not exist in the USA?

[JDB]

tontoro wrote:

JDB wrote:

tontoro wrote:

I see. So why do we read on here people (maybe Rob?) saying things like “Amex UK can’t offer the same benefits as Amex in the USA, because their fees are capped and so can’t afford it”?

Because there are lots of other people in the credit card food chain between you using your card and the merchant getting the funds. The big one is the ‘merchant acquirer’ – people like Worldpay.

Do these people not exist in the USA?

Yes, they do, albeit they are often the same bank as the card issuer eg Chase. The overall fees are much higher so there’s plenty to share around. In some countries like Australia, merchants can still add fees for card payment.

[SamG]

I believe they’re capped when it’s a co-branded card e.g. BA as they count as a third party

@JDB has the same experience as me in a past life – we did accept Amex as we were a travel company but maintaining the separate merchant account and reconciliation of net settlement was a pain that I imagine many other types of business wouldn’t bother with

[Alex G]

When I used to do the books for a small retailer, Amex were charging us 5%. MC and Visa charges were 1.6%. And it made the bank reconciliation more complex. I persuaded the owner to stop taking Amex. We didn’t lose any business.

[tontoro]

Interesting stuff, thanks

[Harrier25]

When searching the web for UK market share I discovered that in 2016 Amex had market share in the UK of 3%, by 2020 that had dropped to 1%. Is that really substanable long term?

[can2]

Yeah, we all know that Amex holders spend much more per card on average. So it’s not just the market share.
Plus some of us even pay Amex to hold the card 😉

[Andrew.]

JDB wrote:

It’s only the interchange fees that are capped, not merchant fees. When challenged Amex will very often match whatever rates the merchant has with VI/MC but Amex still operates via a different system, is slower to pay and pays net of fees (although they will ultimately pay gross) which makes reconciliations a real pain. It’s almost as much about the admin being a real pain as the fees.

You’re underplaying the pain that it is to reconcile Amex transactions, or at least the pain I felt 10 years ago when I last reconciled them for a trade retailer with 200-300 outlets.

It may have changed by now, but from memory, when you download the reports, they aren’t even CSV! Everything’s got leading zeros and is separated by Ascii code 8 & 32 (tab command and space). It’s almost as if they’ve taken the 1960s IBM terminal emulation that would have been used to send print-outs to merchants and dumped it into downloadable block text. My old colleague swore that he found an Ascii Char 7 hidden in there (code to ring a bell on an impact printer).

Oh, and rounding. Even once you’ve cleaned it, filtered it, got everything into the right columns, you’ve still got pennies out left right and centre due to rounding down.

[TooPoorToBeHere]

Wot no EBCDIC?

[SuzyWoo8]

We dropped offering Amex along time ago due to high charges, but a few years ago they contacted us about new options for small businesses. It was the lowest processing charges of any credit card we accepted, below 1% and no minimum monthly spend. We were delighted when people chose to use American Express to make a purchase. Amex need to promote this merchant option better.

[SuzyWoo8]

We stopped offering payment by Amex over a decade ago due to high charges. Then a few years ago they contacted us about their new options for small businesses. It was the lowest processing charges of any credit card that we accepted, below 1% and without any minimum monthly spend. We were delighted when people chose to use American Express to make a purchase. Amex really need to promote this service better to other small businesses.