Why Aren’t American Express Cards Accepted Everywhere?

 Photo Courtesy: American Express Canada

Photo Courtesy: American Express Canada

Leaving Home With Only American Express Is Not A Good Idea

First Published: April 29, 2013 A Dawn Journal

We often hear that there are so many places that won’t accept American Express (Amex) cards. If Amex is such a big name then why they are not universally accepted like VISA and MasterCard?

There are a myriad number of reasons why some merchants won’t use Amex. However, if we dig down to its basics, there are a few I came up with.

American Express offers both conventional credit cards where you can carry your balances and charge cards where you are required to pay in full every month. Unlike other major credit card companies who rely on high volumes to make money, American Express relies on higher margins to make profit by targeting affluent customers. Its affluent customers are spending a lot more money in lower volumes as opposed to higher volumes with smaller transactions.

Retailers pay much higher fees to provide American Express services than other credit cards. Also, other credit cards use a 3rd party to facilitate their services (like an issuing bank, trust company, etc.), but American Express does it all by itself and keeps all charges for itself for higher profits. For some retailers, it will not make sense to pay higher fees to American Express as they may not be able to make money on fewer transactions. However, merchants who have businesses where they can make a lot more money with fewer transactions (as affluent consumers will spend lot more than average consumers) will be glad to offer American Express.

There are other reasons for merchants not to accept Amex, but what I have discussed above are the most common deciding factors on accepting American Express.