Everything You Need to Know about American Express’ Merchant Pricing

Everything You Need to Know about American Express' Merchant Pricing


One thing we’ve often had hard time explaining to our existing and prospective clients is that we have no control over American Express’ pricing. As we have not explicitly stated AmEx’s rates on our website, merchants would often think either that we are hiding them or that we do not provide AmEx acceptance. The reality is altogether different. Yes, we do provide AmEx processing services, however, while we do set the rates for Visa, MasterCard and Discover, AmEx does it on its own. This is the case not just with UniBul Merchant Services, but with all other processors.


What happens is that, once your merchant account is set up, AmEx will send you a letter listing the terms and conditions of your contract with them, including pricing details. Now, AmEx’s pricing is not arbitrary, but it’s determined by your business type and is completely independent of your choice of processing company. Moreover, your AmEx account is transferrable and remains active even if you close down the merchant account with your processor.

American Express Merchant Pricing


Once your merchant account is approved, and provided you have elected to accept AmEx cards, your processor will send your information to American Express (alternatively, you may be asked to fill out a separate AmEx agreement). Your AmEx pricing will be determined by your MCC code and will fall into one of the following categories:

Industry

Discount Rate

Fast Food Restaurant 3.50%
Independent Gas Stations 3.25%
Lodging 3.50%
Mail Order and Internet 3.50%
Office-based Healthcare 2.55% (only for MCC 8011, 8021)
Other Transportation 3.50%
Restaurant 3.50% + $0.05
B2B 2.89% + $0.15
Retail 2.89% + $0.10
Services, Wholesale and All Other 2.89% + $0.15
Supermarket 2.30%
Telecommunications 3.50%
Tuition 2.40%


Your processor may and probably will add a surcharge in the form of a percentage and / or per-transaction fee.

Other AmEx Fees


In addition to the discount rates listed above, American Express may charge the following fees, under certain circumstances:

  • Gateway fee — $0.001 per transaction. If your processor routes authorization requests through the Visa or MasterCard processing gateways, AmEx will pass the associated fees to you, after a certain threshold is met.
  • Card-not-present charge — 0.30 percent of the transaction amount. This fee is applied to any retail or restaurant charge (see table above), for which the card was not presented at the point of sale (e.g. charges by mail, telephone, fax or the internet).
  • Voice authorization fee — $0.65 per call. Just as with Visa and MasterCard transactions, AmEx voice authorizations may be attempted whenever your point-of-sale (POS) terminal cannot connect to American Express’ electronic authorization system.
  • Check processing fee — $1.50 per check. This fee is assessed for any check issued by AmEx.
  • Paper statement fee — $4.95 per statement. Electronic statements are free.
  • Paper submission rate — varies. Transactions are typically submitted electronically, however merchants like taxis and limousine services, street fairs, etc. are allowed to submit transactions on paper, but are charged a higher discount rate.
  • Technical specifications non-compliance fee — $0.10 – $1.00 per transaction. This fee is applied to transactions that do not comply with American Express’ technical specifications.
  • Monthly gross pay fee — 0.03 percent of the transaction amount. This fee is charged to merchants participating in the Monthly Gross Pay Option when the transaction amount exceeds a pre-determined threshold amount.
  • Data incident management fee — up to $100,000 per data incident. This fee is charged to merchants who have suffered a data breach.
  • Data security non-validation fee — $50,000 – $400,000. Merchants have reporting obligations under AmEx’s Data Security Operating Policy, depending on their transaction volumes.
  • Excessive dispute fee — $5 per disputed transaction if the merchant is in the Immediate Chargeback Program or $15 if it is not. This fee is charged if in any three consecutive months a merchant’s monthly ratio of disputed to total transactions (excluding credits) exceeds three percent, and then in any subsequent month when the merchant exceeds this ratio again. The fee is only applied to the disputed transactions in excess of this ratio.


So there you have it. At present, these are all the possible fees you may be charged by American Express.

The Takeaway


Compared to the other major card brands, American Express transactions are the most expensive ones to process and that’s just the way it is. It is going to be your choice whether to accept their cards or not, however, as I always tell merchants, whatever your decision, it doesn’t hurt to open up an AmEx account, just in case. There is no downside, as you get charged no monthly fees and if you do decide at some future point that AmEx acceptance may be worth it, after all, you can start doing it immediately.


Image credit: Wikimedia Commons.

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