Credit Card Processing

American Express OptBlue Pricing & Acceptance

by

American Express’s OptBlue program provides the possibility of lower fees for informed merchants.

OptBlue provides potential benefits to businesses in the form of transparency and reduced costs over current One Point pricing, but it also opens the door for uninformed businesses to overpay.


OptBlue Rates & Fees

I sent a formal request to American Express (also referred to as Amex) requesting permission to disclose its OptBlue pricing in this article, but American Express denied my request saying, “…we do not disclose our OptBlue pricing.”

So, for now, OptBlue pricing tables must unfortunately be omitted from this article.

The omission of pricing tables makes providing examples of total processing cost impossible. But fortunately, it doesn’t hinder an explanation on how OptBlue pricing functions and how best to shop for the most competitive solution.

Here’s Amex’s introduction video about OptBlue pricing:

We’ll also break down the pricing model in the rest of this article.

American Express “Wholesale” Rates

American Express’s base rates and fees are the same for all processors. It would be nice to simply tell you what those rates are, but per my note in the paragraph above, American Express would prefer to keep businesses in the dark at this juncture. With that said, many processors will provide a copy of OptBlue pricing if asked.

If/when you’re able to get your hands on a rate schedule you will see that each OptBlue pricing category consists of two fees — the first is a percentage (the rate), and the second is a flat dollar amount (the transaction fee).

Like Visa and MasterCard’s interchange, OptBlue consists of many pricing categories (about 132), and several variables impact the pricing category to which an OptBlue transaction is routed. These variables are a business’s acceptance method (card-present or card-not-present), merchant category code (MCC), and its average sale amount (also referred to as average ticket).

For example, a retail business that swipes a transaction for $80 will have its transaction routed to a different OptBlue pricing category than a restaurant that keys in a $250 transaction. The resulting rate and fee for each transaction will differ, but it will be the same regardless of the processor a business is using.

For this reason, when comparing credit card processors, the rate and fee paid to American Express is far less important than the markup paid to the processor, which I will discuss a little later on in the article.

Related Article: Merchant Category Codes.


American Express “Assessment”

OptBlue pricing brings with it another similarity to Visa and MasterCard’s pricing structure in the form of a 0.15% fee paid to American Express that is based on gross volume.

American Express’s fee (called an assessment or sponsorship fee) is slightly more than the volume assessment charged by Visa and MasterCard, which you can see here.

Like OptBlue rates, Amex’s assessment is a cost that is consistent for all processors.

Card-Not-Present Surcharge

American Express charges a 0.30% surcharge on all card-not-present (CNP) volume. It’s important to note This CNP surcharge is in addition to the assessment of 0.15%. That brings to total fee on card-not-present volume to 0.45% (0.30% CNP surcharge + 0.15% assessment).

We’re fielding a lot of questions from our clients about pricing as more and more processors make the switch from OnePoint to OptBlue. One of the more common questions is why Amex has opted to add a blanket surcharge of 0.30% to all card-not-present volume instead of simply raising its base card-not-present rates by the same amount.

Frankly, it’s unclear to us why Amex has chosen this pricing structure. Amex has not clarified.

We are now keeping an updated list of American Express assessments on our credit card processing fee page.

Processor Markup

The processor’s markup is the only component of cost that varies with OptBlue. The costs resulting from base rates and assessments paid to American Express are the same for all processors.

So, as with Visa and MasterCard, the processor that will provide the most competitive OptBlue pricing is the one that offers the lowest markup over cost. And achieving the lowest markup starts with the ideal pricing model.

Processors can use two general types of pricing to pass the costs of OptBlue and markup to a business. The first and most widely used is cost-plus and the second is tiered/bundled.

Cost-Plus Pricing

The cost-plus pricing model with OptBlue functions in virtually the same way that the interchange-plus pricing model functions with Visa and MasterCard. I prefer to call it cost-plus in reference to OptBlue because American Express’s base costs aren’t technically interchange.

So, semantics aside, a cost-plus pricing model is where a processor adds a fixed markup to the base cost of processing, which in this case is OptBlue rates and fees plus Amex’s assessment.

The processor’s markup takes the form of a percentage, such as 0.15%, a transaction fee, such as $0.10, or both. Cost-plus is the preferred pricing model since it’s transparent and has the potential (more on this later) to be lowest cost.

More detail on cost-plus pricing can be found by following the link above for interchange-plus. That article is about interchange-plus pricing for Visa and MasterCard, but the fundamentals of how interchange-plus functions are the same when applies to cost-plus for OptBlue.

Tiered/Bundled Pricing

Processors can also charge businesses for OptBlue using a tiered pricing model (also called bundled pricing).

Tiered pricing is opaque and potentially more expensive when compared to cost-plus, so it’s not the optimal pricing model for OptBlue.

Tiered pricing for OptBlue functions in the same way it does when processors use a tiered model to charge fees for Visa and MasterCard. Essentially, the processor routes OptBlue base rates through a few (often three) rates of its own. The result is that a business only sees a processor’s contrived rates. Without the OptBlue rates, the business is unable to calculate the processor’s markup.

Business Eligibility

Businesses that process less than $1 million in annual American Express volume are eligible for OptBlue. If a business currently processes in excess of $1 million, or when a business reaches $1 million in Amex volume, it must sign a merchant processing agreement directly with American Express instead.

OptBlue Price-Gouging

OptBlue is relatively new and many businesses aren’t aware that it exists. Businesses that are aware of OptBlue often don’t know how it works. In both cases, the stage is set for a willing processor to overcharge for Amex fees.

The final rate a business pays is no longer set by American Express. The markup charged by the processor dictates the final total rate. Markups applied by processors will differ, and businesses that don’t shop markups will overpay.

Knowing base costs and how OptBlue functions will allow your business to shop effectively for the most competitive markup.

Related Article: Did OptBlue Backfire for Small Businesses?


Processor Implementation

As of 2018, most processors support OptBlue. However, some businesses may still be on an older pricing model. If you’re confused on your options with Amex or want to find out if switching to OptBlue can save your business money, use CardFellow’s free quote request tool to see how much you’ll pay.

TwitterFacebookLinkedIn
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.

FOUND THIS USEFUL? SHARE THIS!
 

Credit Card Processing exposed

Use the secrets that credit card processors don't want
you to know to drastically lower your credit card
processing fees.

Read Now!
 

You might also like…

Amex Rates

View all articles

Please join the conversation

Your email address will not be published.

6 COMMENTS

  1. from Jamie Killeen, on March 15, 2016 10:55:33

    Great article; nice to see someone else ‘selling’ the truth. I have numerous multi-location businesses that unbeknownst to them will qualify for OptBlue because each MID/account/Dba is treated separately by us (the ISO), so Amex volume rarely exceeds the $1M per year. It is also good to note that business owners no longer need to get 2 separate statements (if still on ESA), avoiding any reconciliation nightmares. Thanks again for your article; I use your site as a reference all the time. Jamie Killeen.

    • from Jamie Killeen, on March 15, 2016 21:35:13

      The other thing I forgot to mention is that American Express ESA’s (External Sales Agents) do not have access to Opt Blue pricing, it is only available to ISO’s (Independent Sales Offices). If you ask your ESA account manager about Opt Blue they will likely suggest that you either don’t qualify for it, or it simply isn’t available (to them, not you). Why? Because understandably they don’t want to lose you as a client, so they will never recommend it to their clients. It is up to you, the business owner to do your own research and find an educated independent sales agent that knows the ins and outs of the industry, and has your best interests at heart…

  2. from Wes Garrison, on February 3, 2016 16:02:30

    First Data keeps insisting to me that their 55 basis point “American Express Discount Fee” is set by American Express and not something they can control. Based on your article, this appears to be false.

    This is in addition to the Amex 15 basis point “Network Fee”.

    The OptBlue agreement they asked me to sign also says to refer to the “American Express Program Pricing Document”, but the representative said they aren’t allowed to release that document.

    Pretty absurd.

    Luckily, Google provided me with a copy.

    Regardless, 0.55% over “Interchange” is obscene. Is this something that the “right” representative can control? What range of markups have you seen from the top-tier processors?

    • from Jamie Killeen, on March 15, 2016 10:48:39

      yes, we can control this…

    • from Ellen, on February 4, 2016 12:08:58

      Hi Wes,
      You’re correct to be suspicious. First Data does set that 55 basis point fee, and they have control over it. (However, the 15 basis point “Network Fee” for Amex is valid/accurate.)

      Yup, the “right” rep or company can control the amount over interchange that you’re charged.
      We’ve seen markups get pretty low, because we run a marketplace where processors essentially blind bid for businesses. They know they have to quote competitive markups. If you’re curious, you can see for yourself by using our free quote comparison tool. You’ll just need to put in some details about your business and you’ll get instant, fully-disclosed quotes to check out what pricing is available to you from several processors. (We keep your contact info private, too, so you won’t get a ton of sales calls.) Give it a shot, it only takes a few minutes. You can get started here.

  3. from Michael Noel, on March 19, 2015 19:51:51

    I have read a few of your explanations of what’s new in the Merchant services world and find it to be very well written.

    I really appreciate what you are providing here.

    Thank you.

    Mike Noel