As a business owner, you have many decisions to make and one of them is what credit cards you’ll accept. You may have noticed many small businesses accept everything except American Express.
While American Express offers great rewards and perks for its customers, it offers higher fees to business owners. Their rates are 2-3.5% versus 1-2% with other cards or even less with debit cards. While that may not seem like much of a difference, it adds up fast and when your margins are sensitive, you feel it. Many business owners risk the inconvenience of not accepting a fraction of their customers’ cards than accept it and pay a high price.
American Express works on a different business model than Visa, Mastercard, and Discover. They are a closed loop network where they issue cards directly to the card holders and merchant accounts directly to businesses. Because they do not have to answer to another financial institution, they can set their discount rates to what they want. While most credit cards make profit off of interest, American Express uses annual fees to card holders and higher swipe fees to merchants. They can so they will.
They also require businesses to undergo another application process before accepting their card. One more thing you’ll have to do.
There’s not much inconvenience to customers as many American Express cardholders carry more than one card because not everyone accepts American Express.
You know your business and what’s best for you. You’ll make the right decision.