Risk vs Reward: Is AMEX Worth It?
For as long as many people can remember, American Express card acceptance rates have always been more expensive than every other card type. If you have ever owned a business that accepted credit cards, you probably discovered that AMEX was charging you 4-5%. These rates caused many businesses to stop accepting AMEX cards.
Fast forward to 2020: a report from AMEX shows that the company “achieved [its] goal of virtual parity merchant coverage in the United States as of year-end 2019.”
What does this mean? AMEX cards are now accepted at nearly every business in the United States that accepts all other card types like Visa, Mastercard and Discover. This is a huge development in the processing industry, and in turn, should benefit both the customer and the business.
One of the biggest questions we still hear is why should a business accept AMEX cards if the rates are normally higher than Visa or Mastercard? Truth is, they are not. In fact, AMEX acceptance rates are now reported to be, on average, nearly identical to those of Visa and Mastercard. A recent Nilson Report completed in 2018 determined that while Visa and Mastercard had a swipe fee weighted average of 2.26%, the same average for AMEX was 2.3%. The 0.04% difference between card types is a much smaller gap than the same report from 2016 that calculated a 2.12% weighted average for Visa and Mastercard versus 2.36% for AMEX (a 0.24% difference).
There is a pretty clear reason why this drop-in AMEX rates occurred. In 2016, AMEX launched its newly created OptBlue processing program which was developed to entice small businesses to accept AMEX cards by lowering rates across the board. The OptBlue program became the primary offering for payment processing companies to provide to new merchants who wanted to accept AMEX cards. Merchants would now be able to receive AMEX sales deposits and report sales data together along with all other card types rather than have a separate AMEX ‘Direct’ account that reports and deposits AMEX sales separately. This eradicated the need to receive and review an additional monthly statement from AMEX.
PolyPay has transitioned many businesses who were not accepting AMEX cards before to now allow their acceptance. The overall average ticket for the merchant then increases. For example, a restaurant merchant with an average ticket of $20 started accepting AMEX cards after switching to PolyPay and saw their average ticket jump to over $25 because AMEX transactions were averaging around $33 (65% higher than average). 98 percent of PolyPay merchants accept AMEX and experience no issues in doing so, while reaping the benefits of the program.
We still run into many business owners that do not accept AMEX for one reason or another. It is up to the merchant to make this decision, but more often than not, they are not familiar with many of the updates AMEX has made to their programs in the last few years. PolyPay is on the forefront of these changes and would love the opportunity to discuss how accepting AMEX cards can benefit your business.
Sources:
https://www.retaildive.com/news/american-express-catches-up-to-visa-mastercard-in-acceptance/571168/