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American Express card rejection

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Imhotrodcrazy
Valued Contributor

American Express card rejection

I received my new AMEX card on Dec. 14th.  I started using it in order to get my $100 sign up fee after spending $1000 in 3 months.  Well, in the last 3 weeks my card has been rejected by 2 merchants.  They stated that they won't deal with AMEX because their fees are too high.  In those 2 cases, I would have spent about $300.  It surprised me, but it will just take a little longer to get to that $1000 mark in 3 months.  But I am learning who takes it, and who doesn't.  Just thought I would share my story with all of you.

FICO 08
TU 842 12/8/18
EX 840 12/29/18
EQ 842 12/8/18
(NASA 30K) ( Amex 44k ) ( Freedom 10.6K ) ( US Bank Cash+ 20k, LOC 15k ) Winners never quit, and quitters never win
last app 2/15
Message 1 of 26
25 REPLIES 25
Anonymous
Not applicable

Re: American Express card rejection

With a few exceptions, Amex is accepted at virtually all the big chain/national stores. In general Amex charges merchants a higher % fee than Visa/MC/Discover but oftentimes they will lower that % for high volume merchants. Smaller stores with lower transaction volumes don't usually get that break so depending on the profit margin of whatever they sell they may see it makes fiscal sense not to accept Amex.

Message 2 of 26
tinuviel
Moderator Emeritus

Re: American Express card rejection

There are a few local, "mom & pop" type of establishments that we do business with that don't accept Amex. The merchant fees are higher than Visa/MC, cutting too deeply into their profit margin. I'm all too happy to use my MC at places like this, as I understand how hard it can be to keep a small business afloat.


Current Scores: EQ 775 (03/04/2014), EX 756 (03/01/2014), TU 760 (03/01/2014)
Ruby Spade Garden Club Member - Last App: 03/04/2013 - No apps until 2014
Cards: Cap1 Venture 6.4k, Cap1 Quicksilver MC 1.75k, BankAmericard 1-2-3 Visa Signature - UCF Alumni Association 5k, Discover 7k, Citi Diamond Preferred MC 10.35k, Wells Fargo Rewards Visa 7k, Chase Freedom 5k, Chase Ink 7.5k, Amex Green NPSL, Dillard's Amex 7.5k, JC Penney 7.5k, Kay Jeweler's 5.1k
Message 3 of 26
Anonymous
Not applicable

Re: American Express card rejection

Funny thing is, often times the merchants don't realize how little it is, especially when compared to losing a sale.

 

$100 purchase will cost a merchant $1.62 from Visa, $1.80 from MC, and $2.19 from AmEx.  That's $0.57 more.  Again, that's nothing when you consider a lost sale.  Sure, most people will just use their Visa or MC (which again, MC cost them more too, getting nitpicky aren't we?) but there still are a number who will just not purchase from them.

 

 

I know I don't go to stores that don't accept AmEx, not because I don't have a Visa, but because I don't want to be told which form I will be paying in.  If I want to pay in pennies, I will pay in pennies.

 

 

On top of that, statistcally, AmEx users tend to spend more, thus making up for the extra lost.

 

 

 

 

If they actually cared about the difference of $0.57 as they claim, then they would refuse credit cards altogether and take only cash, which has no fees, or debit, which is capped at less than 1/3 of the Visa cost.  Sure, $0.57 adds up after thousands of dollar... but so does the $1 more that they pay to accept Visa over debit cards...

Message 4 of 26
pizzadude
Credit Mentor

Re: American Express card rejection

 

Yep, I believe that AMEX merchant fees are generally around 2.25 or 2.5% of the transation amount, which is maybe 1% higher than Visa/MC.   I have no idea about Discover though, I would guess that they are prob in the ballpark of Visa/MC

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Message 5 of 26
SimonP
Valued Member

Re: American Express card rejection


@Anonymous wrote:

 

IIf they actually cared about the difference of $0.57 as they claim, then they would refuse credit cards altogether and take only cash, which has no fees, or debit, which is capped at less than 1/3 of the Visa cost.  Sure, $0.57 adds up after thousands of dollar... but so does the $1 more that they pay to accept Visa over debit cards...



One more thing is these are business expenses, and merchants can deduct it from tax. I am sure they are more worried about the return policy than the transaction surcharge of Amex. In my area, those who do not accept Amex are little stores and gray gas stations where prefer cash! These are the stores that may be falsifying their income and tax return.

My Wallet: Wells Fargo Visa, Chase Freedom 5%, Chase Sapphire Preferred (CSP), Chase Sapphire, Amex Blue Cash Preferred (BCP), US Bank Cash+, Citi Premier
Message 6 of 26
Anonymous
Not applicable

Re: American Express card rejection

I believe the Amex merchant fee can go as high as 5%, although I'm not sure under what circumstances that would happen - perhaps new merchant? My family's business has been accepting Amex for over a decade and our fee is about double Visa/MC at 3%, not just a fraction of a % difference. Furthermore, they charge a monthly flat fee (regardless of the number of transactions actually processed) and then there's the whole issue of charge backs - Amex almost always sides with the customer and automatically deducts the charge back from the merchant's account. They can also be slow to dispense funds. So its great to be an Amex card holder b/c they have great customer service, great rewards, and great protection benefits. But being a merchant requires much more sensitive evaluation of the cost/benefit relative to one's profit margin.

Message 7 of 26
pipeguy
Senior Contributor

Re: American Express card rejection

Funny thing is, often times the merchants don't realize how little it is, especially when compared to losing a sale.

 

$100 purchase will cost a merchant $1.62 from Visa, $1.80 from MC, and $2.19 from AmEx.  That's $0.57 more.  Again, that's nothing when you consider a lost sale.  Sure, most people will just use their Visa or MC (which again, MC cost them more too, getting nitpicky aren't we?) but there still are a number who will just not purchase from them.

 

 *********

 

Up until a few years ago I owned a business that ran about $500,000 a year through credit cards. My merchant agreement was signed in 1990 and remained basically the same other than yearly increases in "discount fees" (percentage credit cards charge the merchant). The above quoted discount fees might be correct for a very large operation, but I was paying 2.95% to MC/V and 4.25% to AmEx, plus a monthly member fee of $30. My merchant rates were somewhat lower because I had a higher average sale of $100+/-.  

 

If you use PayPal for your credit card sales, meaning they are your provider, as many small sellers on eBay and the net do, the fee is 3.95% plus 30 cents per sale for MC/V. Selling on eBay and using PayPal to take credit cards will cost you 15% off the top (gross) of every sale. "Discount costs" are a major expense to merchants, although I will say that those buyers that used AmEx tended to make larger purchases.

 

Just a final thought to add perspective - I was in Starbucks the other day and the "customer" in front of me as getting his coffee re-filled which cost 50 cents - he paid for his 50 cent refill with a Visa card, not debit,  a Visa credit card for 50 cents.

 

 

Message 8 of 26
john398
Senior Contributor

Re: American Express card rejection


@pipeguy wrote:

 *********

 

 

Just a final thought to add perspective - I was in Starbucks the other day and the "customer" in front of me as getting his coffee re-filled which cost 50 cents - he paid for his 50 cent refill with a Visa card, not debit,  a Visa credit card for 50 cents.

 

 



Hey if it was a 5% reward card on dining that 50cents would be 2.5 cents rewards

Message 9 of 26
KingAdrock
Established Contributor

Re: American Express card rejection

HotRod skipped out on the purchases because he's trying to break a spending ceiling in a certain amount of time so get a sign-up reward. But that's a special case, I don't believe most people just drop hundreds of dollars of stuff and walk out the door because a merchant says "Sorry we don't take Amex/Discover/etc". Most will just pull out a different card (or cash) and buy it anyway. That's what I do. I think you all are overstating how much sales are actually lost here.

Message 10 of 26
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