Why Your Favorite Small Business May Not Accept Amex Credit Cards

by Brittney Myers | Updated July 21, 2021 - First published on May 5, 2021

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A woman handing her credit card to the cashier behind the counter in a clothing store.

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The cost of accepting Amex cards can be too much for some businesses.

For most Americans, everyday purchases tend to occur at places that will take your money in just about any way you care to hand it over. But every once in a while, you'll still run across businesses that are a little pickier about your payment methods.

More often than not, if a business restricts the type of credit cards it accepts, it's American Express that gets the short end of the stick. This can be a big problem for fans of rewards credit cards, as Amex offers a number of hugely popular products. From travel rewards cards to cash back cards and even business credit cards -- if you have multiple rewards cards, chances are good one of them says "American Express" on it.

Given how popular Amex cards undeniably are, why are they most often the ones you can't use? Like most things these days, it all comes down to cost: Amex credit cards simply cost businesses more money to accept. As a result, some businesses, especially small businesses with slim profit margins, simply choose to not deal with Amex at all.

Businesses pay multiple credit card fees

To understand the problem, you need to understand the basics of how credit cards work. Credit cards represent a line of credit with a bank, which we call the credit card issuer. When you make a purchase at a business using your card, the transaction needs to be sent to your issuer, and the money needs to make its way back to the business.

Most businesses work with a credit card processing company, which provides the card terminal where you use your card. The processor is responsible for sending the transaction information to the credit card network, which acts as a relay between the processing company and your issuing bank.

Once the issuer approves the transaction, the payment gets sent back through the chain. As you might expect, everyone along the line expects to get paid for their services. That means each credit card transaction comes with its own fees.

  • Payment processing fee: This is the cost paid by the business to the processing company.
  • Assessment fee: This fee goes to the credit card network. (In the U.S., this is usually Visa, Mastercard, Discover, or Amex.)
  • Interchange fee: The bank that issues your credit card gets this fee.

The total cost of a credit card transaction varies dramatically based on a number of factors, such as the type of transaction and the type of card. Premium rewards cards can have higher fees. But, of course, the main determinant is the actual companies involved.

Amex tends to charge higher fees

American Express acts as both the credit card issuer and the credit card network for its cards. That means it controls both the assessment and interchange fees -- and gets to keep them both.

When it comes to setting fees, Amex doesn't believe in undervaluing itself. Of the four major credit card networks, Amex has the highest fees on average, charging more than a full percentage point higher than its competitors in some cases.

When you're a small business already operating on a profit margin of a few percentage points, forking over an extra 1% to a credit card company can make a huge dent in your bottom line.

In some cases, merchants can pass that cost on to the customer through credit card surcharges or convenience fees, but those are usually only allowed in specific circumstances. It's often easier to simply not accept Amex cards at all and hope your customers understand.

It pays to diversify

As inconvenient as it can be when your favorite corner shop doesn't accept your favorite rewards card, it certainly makes sense that any small business would be wary of the extra price that comes with accepting Amex cards. And it's not usually much of a hardship for customers to keep more than one credit card on hand, especially since there are more than few good reasons to diversify your card collection.

In addition to ensuring you have a broad mix of cards, diversifying your collection is also important if you want to maximize your credit card rewards. Two or three cards with complimentary bonus rewards categories can quickly boost your earnings. Having a few credit card accounts in good standing can also be good for your credit score, as lenders like to see you can responsibly handle multiple credit accounts.

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