It’s not a secret – accepting credit cards as a business in any industry has become the rule, not the exception. In fact, it is believed that by 2017, just 23% of all point-of-sale transactions will be made is cash. Plastic has been embraced by a large majority of business owners, with one notable exception – American Express.
Why are businesses so reluctant to accept American Express? Simply put, fees. Most credit card companies charge an interchange fee of between 1-2%. American Express charges an average of 3.5%, which at first glance seems entirely too high for most small businesses. Although the percentage is higher than most, it is important to consider factors outside of cost when deciding whether or not to accept American Express.
Merchant Fees Revealed
Many small business owners choose not to accept American Express because of their higher fees. Although on the surface American Express’s average 3% interchange rate is higher than Visa or Mastercard’s 1-2%, these numbers do not tell the whole story. Visa and Mastercard offer services for credit as well as debit transactions, and the 1-2% rate that is often for debit transactions only.
With American Express, although the rate is higher, they exclusively deal in credit transactions, meaning what you see is what you get. What does this mean for your business? If you are accepting credit card transactions from Visa and Mastercard, your fees might still be higher than the 1-2% advertised rate. After percentage markup and ancillary fees, you might be closer to American Express rates than you might think. American Express doesn’t seem like such an outlier anymore, does it?
What Customers Want
As a business owner, you know the importance of creating a positive customer experience every time. Any impediment that adds frustration to the buying process is going to reflect poorly on your business and ultimately affect your bottom line. With around 140 million people worldwide using American Express, alienating those consumers with “I’m sorry, we don’t accept American Express,” as they’re attempting to purchase your product is risky, to put it lightly. Although some business owners might balk at the higher fees, accepting American Express might just prove to be one of your best investments.
American Express OptBlue
For many small businesses operating on low margins, the higher fees required of American Express can seem too high to consider. American Express OptBlue is a way for small businesses to experience the benefits of accepting American Express without the traditionally high price tag. Businesses that qualify for the OptBlue program benefit from more manageable fees and a more streamlined overall process. OptBlue allows merchants to “bundle” American Express with their other accepted credit cards, which means one point of contact, one statement, and more transparent interchange fees.
Although American Express might seem too expensive at first glance, it is important to remember that fees don’t tell the whole story. The benefits of customer satisfaction, increased sale opportunity, better customer service, and now the OptBlue program make American Express a wise investment for any business.
Here at Fattmerchant, every member is automatically signed up for American Express OptBlue. We believe that you should never lose a sale because a customer wants to use American Express. Through OptBlue and our 0% markup, your business will save up to 40% a month in processing fees. When comes to American Express, you can’t afford not to!