Credit Card Processing

American Express Discount Rate & Merchant Account

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March 21, 2018

In the past, American Express was the most expensive credit card to accept; a reputation that it hasn’t shaken despite introducing a new pricing structure to bring costs more in line with other card brands. There’s a lot of confusion of American Express discount rates, pricing models, and settlement. We’ll untangle it in this article.

For the most up-to-date American Express pricing, use CardFellow’s quote comparison tool.


American Express Pricing Models

Amex technically has three pricing models: ESA, One Point, and OptBlue. OptBlue is the newest, and the most similar to the other card brands’ models.

ESA is American Express’ direct processing program, meaning a business will have an account directly with American Express, and Amex will settle the transactions. Businesses that process $1 million or more per year with American Express must have a direct account – you can’t go through your processor once you’re at that volume.

One Point (also referred to as American Express Full Service by First Data) is a program offered by American Express that makes it possible for participating processor to streamline the authorization, settlement and reporting of American Express processing volume. The main advantages to American Express One Point are faster settlement of American Express transactions and reporting that is easier to reconcile.

American Express’ OptBlue program will replace the company’s One Point pricing for most businesses. OptBlue allows processors to add a markup to Amex’s base rates, which creates different rates for American Express among processors.

For the purposes of understanding American Express costs, the link below will provide more extensive detail on the OptBlue program, while this article will provide information about ESA, One Point, and American Express’ network and structure in general. The information relevant to you will depend on which pricing model your processor uses.

Related Article: American Express OptBlue.


Closed Loop Network

American Express operates on a closed loop network. This means that American Express issues credit cards directly to its cardholders, and opens merchant accounts directly for business that accept its cards.

The closed loop network of American Express gives the company a competitive advantage over open loop networks like Visa and MasterCard.

Unlike American Express, Visa and MasterCard do not issue or acquire credit cards. Instead, these companies maintain an open network that allows various issuing and acquiring banks to communicate in order to facilitate the credit card processing system.

It’s easiest to think of American Express’s closed loop network as a dictatorship, and the open loop network of Visa and MasterCard as a democracy.

Since American Express does not have to answer to any other financial institution for issuing or acquiring, the company is free to set its discount rates at whatever level the market will bear. This is why businesses pay significantly more to process American Express credit cards than they do to process MasterCard or Visa credit card transactions.

On One Point, American Express sets its own discount rates which are exactly the same for all credit card processors. However, this may be different for OptBlue, and it’s important to know which pricing model your processor uses.

American Express Discount Rates

American Express discount rates are based largely on a business’s merchant category code (MCC). Unlike Visa and MasterCard interchange fees, American Express discount rates have relatively few qualification factors.

American Express discount rates for retail stores and restaurants will downgrade (meaning the rate increases) if a transaction is keyed-in rather than swiping a card, but most rates are the same regardless of transaction method.

American Express does not charge a credit card transaction fee and a discount rate for every industry category. Many rates consist of a percentage-base charge (discount rate) without a transaction fee (flat dollar amount, i.e. $0.10).

However, virtually all credit card processing services will charge a fee to process American Express transactions through their network. So, even if American Express does not charge a transaction fee directly, a business will inevitably have to pay a transaction fee to its credit card processor for processing American Express transactions.

The following table outlines basic American Express discount rates on the One Point model. Keep in mind that discount rates are subject to change, and that OptBlue rates will not be the same.

Business TypeAmerican Express Discount Rate & Transaction Fee
Fast Food Restaurant3.50%
Lodging3.50%
Mail Order & Internet3.50%
Restaurant *3.50% plus a $0.05 Transaction Fee
Telecommunications3.50%
Other Transportation3.50%
Independent Gas Stations3.25%
Retail *2.89% plus a $0.10 Transaction Fee*
Services, Wholesale & All Other2.89% plus $0.15 Transaction Fee*
Office-based Doctor, Dentist, Orthodontist2.55%
Healthcare not office-based2.89% plus $0.15 Transaction Fee
Tuition2.40%
Supermarket2.30%
* A surcharge of 0.30% will apply to transactions that are not swiped. For example, keyed-in, e-commerce and other card-not-present transactions will be charged a discount fee of 3.80% instead of 3.50%

American Express Settlement

In addition to charging hefty discount rates, American Express transactions take longer to settle when compared to Visa and MasterCard. This means that deposits for American Express credit card sales take longer to show up in your business checking account than deposits for Visa and MasterCard sales.

Barring a processor-imposed risk hold, Visa and MasterCard transactions are generally settled within 24-48 hours, meaning that deposits will show in your business checking account 24-48 hours after approved authorizations are sent to the processor for settlement.

With the exception of American Express One Point, which we will cover in a moment, American Express transactions typically take almost twice as long to settle as Visa and MasterCard transactions. Deposits will generally take three to seven business days to show up in your business checking account.

One Point Settlement

American Express One Point makes it possible for a processor to settle American Express processing volume along with Visa, MasterCard, and Discover volume. Instead of receiving a separate, delayed deposit for American Express transactions, all credit card sales are sent in a single deposit in the time it takes to settle Visa and MasterCard volume. This means that American Express volume settles roughly one to four days faster through One Point than it does with a traditional American Express merchant account.

One Point also streamlines the reporting of American Express volume. Instead of receiving a separate statement for American Express transactions, One Point makes it possible for a processor to report the card volume and charges for Visa, MasterCard, Discover and American Express on a single monthly statement.

Should you accept American Express?

High discount rates and delayed settlement lead many businesses to give careful consideration to the costs and benefits associated with accepting American Express credit cards. In fact, we help many businesses here at CardFellow that choose not to accept American Express, citing the costs.

Customer demand and cash flow requirements are typically the primary determining factors when considering whether or not to accept American Express.

Businesses that cater to a professional clientele or that operate within the travel and tourism industry will likely be forced to accept American Express due to customer demand.

The following table provides an estimate of the percentage of total charge volume that American Express will account for within a given industry. Businesses that operate within industries with a high percentage of American Express volume should strongly consider accepting the card.

IndustryAmerican Express % of Total Charge Volume
Restaurant / Food Service35%
Travel & Tourism35%
Supermarket & Grocery3%
Retail15%
E-Commerce & Mail-Order15%
Entertainment25%
Business-to-Business Service & Wholesale15%

Businesses that require steady cash flow should give careful consideration to the extended settlement time associated with American Express processing volume. If cash flow is a concern and customer demand for American Express is high, processors that are able to offer American Express One Point should be considered.

American Express Fee Credits

Another factor when considering whether to accept Amex is interchange credits. A little-known “hidden” credit card processing fee is associated with issuing a customer refund. The issuing banks of Visa, MasterCard and Discover will reimburse businesses a portion of fees when a customer is given a refund. American Express does not refund fees unless a business agrees to pay a higher discount rate on gross sales volume. If you’re in a business that regularly issues refunds to customers, the money you lose in fees can add up quickly.

Note: Even though fees are refunded by Visa, MasterCard and Discover, processors often intercept the refund before it reaches the business. Read how to stop your processor from stealing your refunds in the article below.

Related Article Don’t Lose Money on Credit Card Refunds.


On page 21, section 4.7 of its Merchant Reference Guide, American Express states (bold and underline styling added by CardFellow):

“A Credit may occur when a Merchant processes a refund for purchases or payments made on the Card. If the Merchant issues a Credit, we will not refund the Discount or any other fees or assessments previously applied on the corresponding Charge, unless the Merchant elects to increase its Discount Rate by 40 basis points (0.40%), in which case, if the Merchant issues a Credit, we will refund the Discount (but not any other fees or assessments) previously applied on the portion of the corresponding Charge that has been credited.”

Essentially, a business has to pay more up front to receive a refund on fees for returns. American Express is a winner either way.

Opening an American Express Merchant Account

It is not necessary to contact American Express directly to open a merchant account unless you process in excess of $1 million/year in Amex alone. If you choose to accept American Express, the processor that you choose will be able to open an American Express account on your behalf.

The processor will integrate your American Express merchant account into your credit card machine, gateway, or other processing solution so that all card brands can be processed through the same application.

Transferring an American Express Merchant Account

A business cannot have more than one American Express merchant account. If a processor opened an account for your business in the past, a new processor will not be able to open a new American Express merchant account on your behalf.

Instead, you will have to provide the new processor with your existing American Express merchant account number so that they may reference the account when configuring your credit card machine, gateway, or other equipment.

If you have lost your American Express merchant identification number, you will need to contact American Express directly. Processors cannot obtain a lost merchant ID number on your behalf.

Getting the Best Amex Pricing

With three pricing models and any number of processors promising different rates and fees, how do you really know what you’ll pay to accept American Express and if it’s good pricing? The easiest way to see exact costs is to use a price comparison tool – it will show you the actual amount you can expect to pay when you accept American Express. Try it now.

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Ben Dwyer

BY Ben Dwyer

Ben Dwyer began his career in the processing industry in 2003 on the sales floor for a Connecticut‐based processor. As he learned more about the inner‐workings of the industry, rampant unethical practices, and lack of assistance available to businesses, he cut ties with his employer and started a blog where he could post accurate information about credit card processing.As the blog gained in popularity, Ben began directly assisting merchants in their search for a processor. Ben believes in empowering businesses by providing access to fair, competitive pricing, accurate information, and continued support. His dedication to transparency and education has made CardFellow a staunch small business advocate in the credit card processing industry.

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2 COMMENTS

  1. from Fred Borg, on June 22, 2017

    We need to know what fees you charge if a customer is using Amex cards & how long it takes for payments to hit our bank.

    • from Ellen, on June 22, 2017

      We don’t set the fees, processors do. You can fill out a quick form to see the rates and fees you’d pay with different processors by going here: https://www.cardfellow.com/sign-up.