Is American Express Lowering Their Transaction Fees?

Is American Express Lowering Their Transaction Fees?

When accepting credit card payments, some small business owners are afraid to take American Express as they charge higher processing fees than MasterCard, Visa and Discover. While this is the case, many are in hope that they will follow suit and start lowering their prices to accept credit cards. Unfortunately, this is unlikely to change anytime soon as American Express has, and always will be, a solution for high-end clients.

No interest payments:

Most customers of American Express do not make interest payments to their credit cards. Instead, they treat it like a charge card which enables a person to use the card and pay it off at the need of the month. This is in stark contrast when compared to the other major credit card companies. For this reason, credit card processing fees are likely to remain high as merchant accounts are one way in which American Express can enjoy a small profit.Unique: As mentioned, when having a merchant account, a person will want to accept American Express as this is a high-end card only carried by people with stellar credit and a decent financial background. Since this is the case, the company can justify higher rates as merchants will gladly pay the extra fees to attract these sellers. Otherwise, if a business does not accept American Express, it is possible to lose out on some customer who demand more.

Rewards:

With a credit card processing account, a company can attract new customers. While many will use Visa or MasterCard, some want more choices. They usually like the freedom to choose since companies like American Express offer some valuable rewards. Whether getting cash back or airline miles, customers at American Express enjoy better rewards than they do with other credit card companies. While this is great for the consumer, it can cause problems for a merchant as they will need to charge higher prices to pay for the rewards programs.

For these reasons, American Express is unlikely to change its business much in the future. One way in which they will not change is simple. As American Express wants to cater to high-end clients who love spending a lot of money, they will need to take in a lot of revenue in other ways. Simply put, American Express is not going to change its merchant fees anytime soon as it is an easy way to bring in more revenue.