Amongst the major payment brands in the United States of America, American Express is known to charge the highest acceptance fees in terms of credit cards. In some cases, the acceptance fees are so high that most retailers out there do not choose taking American Express cards at all. They do so towards preventing the overall risks of losing sales in the entire process. Indeed, for several decades, merchants from all around the world have forced the American Express executives to lower the overall AmEx rates. As a matter of fact, they did experience some sort of success in the given process.
A major victory was achieved during the time of 1991. The retailers achieved success during the Boston Fee Party’s aftermath. It was a protest that was orchestrated as well as paid for by some PR firm that was hired by Discover –a major rival of American Express. This was later on joined by over 250 restaurants across the United States of America. Due to this, American Express was forced eventually towards gradually reducing the overall American Express fees. This, at that time, was averaging at approximately 4 percent. However, the overall difference between the fees of American Express and MasterCard or Visa remained quite significant.
In the latest report on annual grounds, American Express revealed that the average rate of discount in the year 2012 was around 2.52 percent. This was slightly lower than the level of 2.54 percent in the year 2011 and 2.55 percent during the year 2010. While making the direct comparison between MasterCard and Visa is not possible, American Express is not known to issue debit cards. However, as per a recent study report, it was revealed that back in the year 2008, the overall average for each of the given associations was lower than 2 percent. Currently, it is much lower than the given value.
Merchant Fee Structure for American Express
Merchants who go forward with accepting American Express are known to charge a specific discount fee for the respective card transactions –except for those that are signed up for the fee plan on a monthly basis. Moreover, the discount fee offered to the merchants might be subject to several other fees as well as assessments. Some of the extra charges are also assessed for specific products or services. At the same time, others might be applied due to the non-compliance of the merchant with the respective procedures and policies of American Express.
Fees by American Express are stated in the respective processing agreement of the merchant. Here is the list of all the possible fees –along with the amount and description.
Discount Fees on Card Acceptance:
American Express is known to make use of different pricing plans –a flat rate pricing and a discount rate plan pricing.
- Discount Rate: It is the amount that is charged from the merchants by American Express for the acceptance of the respective cards. The amount might vary. An inbound fee of around 0.40 percent gets applied to any charge that might be made using the card by the issuer located outside the USA.
The fee remains applicable to a major number of industries –including telecommunications, supermarkets, retail, restaurant, lodging, gas stations, education, and others. Moreover, the inbound fee does not remain applicable to transactions related to gift cards or international prepaid transactions.
- Monthly Flat Fee: It is estimated to be around $7.95 on a monthly basis. If American Express is known to charge the merchants some flat fee on a monthly basis, instead it might even charge a discount rate. This serves to be the alternative option that is available to merchants running small-scale businesses. It turns out to be an estimated value of transactions of American Express less than $4999 on an annual basis.
When the transaction limit of $4999 annually is exceeded –during the period of any consecutive 12 months, the pricing of the merchant will be switched automatically to the standard pricing of discount rate. Merchants who are involved in the following industries will be required to set up a proper flat fee on a monthly basis –irrespective of the approximate processing volume:
- Businesses based out of home
- Telephone order (TO) or Mail Order (MO)
- Physical-internet delivery merchants
- Gateway Fees: It might vary (around $0.001 charge). If the authorization requests of the merchants tend to be routed with the processing gateways of MasterCard or Visa, then American Express is known to pass the associated feed to the given merchant.
- Non-swiped Transaction Fees: It is around 0.30 percent of the total transaction amount. The fee gets applied to any transaction for which American Express might not have received both the magnetic stripe-read information from the given card & the indicator about whether or not the card was swiped.
- Voice Authorization Fee: It is around $0.65 on a per request basis. If the POS (Point of Sale) system of the merchant is not able to connect to the electronic authorization system of American Express, the merchant is then expected to call the official contact number of the company while obtaining a voice authorization.
Submission & Settlement Fees
- Paper Statement Fee: It is estimated to be around $7.95 on a per statement basis. The given fee gets assessed in case the merchant would choose receiving paper-based statements instead of the default electronic versions.
- Check Fee: It is estimated to be around $1.50 on a per check basis. The given fee gets assessed for the check created or issued by American Express.
- Monthly Gross Pay Fee: It is around 0.03 percent of the total transactional amount. The given fee is charged out of the merchants who might be enrolled in the option of gross pay on a monthly basis. This is applied when the given transaction amount is known to exceed some pre-determined threshold amount.
- Inbound Fee: It is 0.40 percent of the total transaction amount. The given fee gets applied to the charges that are made with the cards as issued by American Express outside the United States.