American Express Transaction Cycle

American Express Transaction Cycle


The transaction cycle for American Express payments broadly follows the procedures employed for processing Visa or MasterCard payments, however there is a key difference. American Express is both the issuer and acquirer for all of its cards, which simplifies the process.


Transaction submission. Credit card payments are not completed until the transactions are submitted to American Express, or to any other credit card company, for that matter. It is important that merchants submit all payments accepted during a given day at the end of it, so that if for some reason one of them does not go through, they can contact the customer and request an alternative form of payment within no more than twenty-four hours.


Typically transactions are submitted electronically to American Express and all point-of-sale and virtual payment processing systems are programmed to automatically do that at pre-defined intervals, usually at the end of the business day. Exceptions are made for specific types of merchants, e.g. taxis and limousine services, street fairs, etc. In such cases, merchants can submit their transactions on paper.


Settlement. The settlement process is initiated when American Express receives the transaction submission file from the merchant. The settlement amount is calculated as from the face amount of the submitted charges are subtracted all applicable deductions, which may include the following:

  • Discount fees. These are the fees American Express charges the merchant for accepting its cards. They are specified in the merchant agreement.
  • Amounts the merchant owes to American Express or its affiliates.
  • Any chargeback amounts.
  • Any credit amounts the merchant may have submitted.


Payment. Merchants typically are paid electronically via ACH transfers. American Express offers three different payment plans, as follows:

  • Three-day payment plan.
  • Fifteen-day payment plan.
  • Thirty-day payment plan.


Merchants have two payment options, as follows:

  • Net pay – the merchant is paid the full amount of the submitted charges minus the discount and other applicable amounts. Net pay is the default payment option.
  • Gross pay – the merchant is paid the full amount of the submitted charges, and then a second adjustment is applied to deduct the discount and other applicable amounts.


American Express uses several formats for reconciling a merchant account. Each format can be used separately or in combination with the other formats:


Merchants have ninety days from the date of the statement to dispute any errors or omissions regarding their discount or other fees or payments for charges, credits or chargebacks.


Image credit: Wikimedia Commons.

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