There’s a long list of companies that don’t want to accept American Express (AMEX), including a lot of auto parts and accessories etailers. AMEX charges hefty fees, their chargeback policies are skewed in the customer’s favor, and they can be difficult to work with whenever there’s a dispute. Compared to VISA and MasterCard, AMEX is a big pain in the neck.
But here’s the thing: AMEX has the kind of customers most businesses want. The average AMEX cardholder spends more money than someone with a VISA or MasterCard, and a lot of small businesses use AMEX exclusively. If your company isn’t accepting AMEX, you’re probably surrendering some revenue to a competitor.
Here’s are four great reasons to accept AMEX:
1. Small Business Owners Spend and They Love AMEX
A lot of small businesses use American Express. This is because AMEX markets to small business owners heavily, offering loans and incentives tailored for entrepreneurs. AMEX has worked hard to build credibility with small business owners, including their wildly successful “small business Saturday” initiative.
Additionally, AMEX offers rewards programs that are catered to business owners. They’re consistently listed as one of the best rewards cards for business.
You might be wondering: “AMEX is popular with small business, but don’t small businesses buy auto parts and accessories wholesale?” The answer is sometimes, but not nearly as often as you might think.
In auto parts and accessories ecommerce, we find that small repair shops and “community mechanics” (people who regularly fix cars for friends and family) buy a lot of products online:
- Smaller shops and independent mechanics often can’t get the time of day from distributors, forcing them to source parts and accessories online.
- Because they’re usually wrenching during business hours, small shop owners and independent mechanics have to place their orders late at night. Online ordering is often their only option.
- Most small shops and independent mechanics pass part costs on to their customers – they don’t necessarily care about getting the best price for a part or accessory.
Basically, if you’re not accepting AMEX, you could be missing out on some steady income from small businesses that regularly buy parts and accessories online.
2. AMEX Cardholders Tend To Spend More
While there are fewer people who have an American Express credit card, these people tend to spend much more than the average person. According to Wallet Hub, the average AMEX cardholder spends three times as much on their card per month than the average cardholder.
Again, part of the reason is that AMEX has consistently good rewards programs. Part of the reason is that AMEX is popular with business owners. Part of the reason is that AMEX is viewed by many people as a “premium” card, with a brand reputation that’s quite a bit higher than VISA or MasterCard.
Again, whatever the reason that a person chooses to have an American Express card, they tend to spend more than VISA or MasterCard buyers.
3. AMEX Credit Card Fees Aren’t Much Different
When credit card companies first starting offering rewards programs, AMEX quickly earned a reputation for sky-high processing fees. Many business owners responded by refusing to accept AMEX.
AMEX processing fees are only marginally higher than every other bank.
But now that rewards programs are commonplace, the difference between processing fees for an American Express card and any other kind of credit card just aren’t that much. As this article on Merchant Maverick explains, AMEX processing fees are only marginally higher than every other bank:
- A basic rewards card from VISA or MasterCard usually has a processing fee of about 1.95%, plus a 10 cent transaction fee
- An American Express card might have a 2.1% or 2.4% processing fee, and a 10 cent transaction fee
On a $100 purchase, the difference between accepting a regular rewards card and a premium rewards card might be 45 cents…hardly enough to get excited about.
NOTE: Many credit card processing companies charge a premium for accepting AMEX. This is because many business owners assume AMEX is more, and therefore don’t question the extra they have to pay. If your credit card processor is charging a substantial premium for accepting AMEX, it’s time to find another processor.
4. Fighting AMEX Is Pointless
Some business owners refuse to accept AMEX on principal. They resent the fact that AMEX takes a larger percentage than other companies, and decide to fight the practice by refusing the card. This is an admirable and understandable sentiment.
But here’s the thing: Millions of business owners have already capitulated to AMEX and accepted higher fees. As a result, many of your competitors currently accept AMEX. If you turn someone away because you don’t like their credit card company, they’re just going to buy product from someone else.
So, while there’s definitely some satisfaction in telling AMEX to go to hell, there’s not much sense in doing it.
Accepting American Express is a good business decision:
- American Express cardholders spend more than average
- The difference in processing fees is pretty minor
- At least one of your competitors – and probably dozens – accept AMEX
If your company wants to push back against increasing credit card processing fees, the best way to do so is to call your member of congress. Banks are constantly trying to change federal laws so they can increase fees – make sure your federal representatives know how you feel.
And remember: If your credit card processor says AMEX costs a lot more to accept than VISA or MasterCard, look for another processor. The cost difference is minimal.
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