According to the Amex website, American Express is accepted by 99% of places in the US that accept credit cards. You may not believe this because you’ve probably been to at least one store that has a sign by the credit card machine that says “No Amex” or something similar.
I’m not here to dispute that claim but rather to shed light on why certain businesses choose not to accept American Express.
This information can be really valuable for consumers and merchants alike. People who have American Express cards can use this to find out where their cards will be accepted. And if you’re a business, this guide can help you decide whether or not you should be accepting Amex cards for your customers.
One of the most well-known credit card brands in the world is American Express. But merchants don’t accept it nearly as much as Visa and Mastercard which are competitors. A lot of people with American Express cards are left wondering why almost no places take them.
There are a few key reasons behind Amex’s limited merchant acceptance
Higher Merchant Fees
The main reason is that American Express has higher merchant fees than other networks. When a credit card is used to pay, the business has to pay a small interchange fee to the credit card network.
Amex’s merchant fees tend to be higher:
- Visa and Mastercard charge 1.15% to 2.5% per transaction
- Amex fees range from 1.43% to 3.3% per transaction
All of those little things add up when a company handles a lot of transactions. It can be very hard for a small shop to make money when they have to pay extra 1% in fees.
As a result, many small and medium businesses decide not to accept Amex since the fees outweigh the potential revenue from Amex cardholders. Large retailers also sometimes drop Amex to reduce costs.
Different Business Model
American Express, unlike Visa and Mastercard, runs both the payment network and the credit card company. This means that Amex depends more on merchant fees to make money.
Visa and Mastercard make most revenue from interest and fees charged to cardholders. They can afford to charge lower merchant fees to maximize acceptance.
Amex depends more on merchant fees since many of its cards have no annual fee and require paying balances in full each month. Amex counts on merchant fees to deliver shareholder value.
Smaller Cardholder Base
While Amex has millions of cardholders, its base is still much smaller compared to Visa and Mastercard. For example:
- There are over 300 million Visa cards in circulation in the US
- Amex has roughly 50 million US cardholders
Many businesses feel they can live without Amex customers since Visa and Mastercard holders account for a larger share of spending. As a result, the added cost of accepting Amex isn’t always justified.
However, Amex tends to focus on affluent cardholders who spend more on average. For high-end merchants, attracting Amex users may make up for the extra fees.
Regional Differences
Amex acceptance can also vary dramatically by country. For example, Amex is widely accepted in its home country of the United States. But internationally, Visa and Mastercard acceptance is generally much higher.
There are a few reasons for this:
- Amex entered some countries much later and has not achieved equal market share everywhere
- Interchange fees and card use patterns differ between countries
- Some merchants only want to work with one processor to reduce complexity
As a result, Amex acceptance is noticeably lower in many European and Asian markets compared to North America. Cardholders who travel internationally need to watch out for places that may not take American Express.
Is Amex Acceptance Improving?
In recent years, American Express has tried various initiatives to improve merchant coverage:
- Allowing cardholders to convert purchases into installment plans to make Amex more appealing to merchants
- Partnering with payment processors like Square to simplify Amex acceptance
- Offering tiered pricing models with lower interchange fees for some industries
- Running targeted sales campaigns to sign up merchants in key segments
As a result, Amex acceptance has slowly been improving. For example, Amex claims merchant coverage in the U.S. has grown to around 90% as of 2022.
However, major gaps still remain compared to Visa and Mastercard, which are accepted at over 99% of merchants. Amex still has work to do before it achieves equal footing.
Tips for Cardholders
While Amex acceptance is improving, cardholders will likely continue facing situations where it is not accepted. Here are some tips:
- Before applying for an Amex card, make sure it makes sense based on where you typically shop
- Carry a Visa/Mastercard as a backup in case Amex is not accepted
- Check ahead of time if a merchant accepts Amex to avoid surprises
- Take advantage of mobile wallet acceptance – Amex is usually accepted through Apple Pay even if the merchant does not directly take Amex cards
The Bottom Line
American Express charges higher merchant fees compared to competitors. As a result, many businesses don’t feel the extra costs are worthwhile for the small base of Amex customers.
This dynamic has limited Amex acceptance compared to Visa and Mastercard. While acceptance is improving gradually, Amex still has a ways to go before catching up.
For cardholders, it pays to understand that Amex is not universally accepted. Always have a backup card on hand and you’ll never get caught short when your Amex card doesn’t work.
Which Countries Do Not Accept American Express?
There are some countries where Amex is not accepted anywhere, including:
Historically, American Express wasn’t accepted throughout most of Africa. But that’s changed as of late. Most recently, Amex partnered with Ecobank to add 12 new countries to its acceptance list in Africa.
That said, just because Amex can be accepted in a particular country or region, it doesn’t mean that it will be widely accepted by every merchant.
Why Some Businesses Don’t Accept American Express
To process American Express cards costs more than other credit cards, so some companies decide not to take them.
Small businesses can get better deals through the Amex OptBlue program, which is for stores that handle less than $1 million in Amex transactions a year. And yes, these rates are a little higher than Visa and Mastercard’s interchange rates. Amex OptBlue is still a little higher in most areas.
Something else that’s interesting about Amex is that they often charge more for higher ticket transactions. For example, a $1,000 transaction will likely have a higher fee than a $100 sale, which is the opposite of what we’ve come to expect for other cards.
So if you have lots of high-ticket sales and you process more than $1 million in Amex cards per year, you’ll likely be paying higher rates than smaller businesses.
Why Amex isn’t accepted at some places. #americanexpress #amex #explained
FAQ
Why is American Express not accepted everywhere?
American Express (Amex) is not accepted everywhere due to higher merchant fees compared to other major credit card networks like Visa and Mastercard. Merchants, especially smaller businesses, may opt out of accepting Amex to avoid these higher processing costs.
Why do less merchants accept Amex?
That’s because American Express charges merchants a higher fee than competitors do. All credit card networks charge processing fees for businesses to accept card payments from that network. But some fees are higher than others.
Why do some restaurants not accept American Express?
As far as the merchants are concerned, American Express charge high fee. So merchants might not see it an as attractive option. Many merchants do not find using it because more people use Visa and MasterCard. Furthermore, many merchants do not find the benefits associated with American Express exiting enough.
What is the downside of American Express?
One bad thing about American Express cards is that they charge businesses for the payments they handle.