Are You Paying Too Much to Take American Express?

If you’re like many business owners, the cost to take American Express is a sore subject.

The consumer-loved cards have traditionally been more expensive to accept than Visa and MasterCard, a fact that causes some businesses to forego Amex acceptance altogether.

But there is another solution. In 2015, American Express introduced OptBlue, a pricing model that could enable lower costs to businesses.

A year and a half later, many businesses aren’t aware of OptBlue, and could be getting overcharged by processors.

OptBlue Details

OptBlue pricing functions much like MasterCard and Visa’s interchange schedules. There are different rates and fees associated with different transactions, and those rates and fees are more in line with Visa’s and MasterCard’s charges. Additionally, OptBlue lets processors add a markup, which previously wasn’t permitted, allowing them to make money as well.

It should be a win-win. Processors would be able to make money on American Express transactions, but businesses would still see lower costs to accept it. American Express would take a bit of a hit profit-wise initially in the hopes that more businesses would accept the cards and more processors would encourage businesses to take Amex, thus making Amex more money overall, too.

Processors See an Opportunity

Instead, what some processors have chosen to do is impose a markup high enough to keep the business’ cost the same. Preying on the complexity of processing and business owners’ unawareness of OptBlue, processors saw an opportunity to increase their own profit without the business’ knowledge. 

Business owners are used to seeing charges for American Express at around 3.5 percent. So if American Express used OptBlue to lower that cost, all processors had to do was increase their own markup to keep the total cost around 3.5 percent. The business would be none the wiser, thinking their Amex charges were the same as they always had been, but the processor would profit handsomely, pocketing the difference between the lower costs and the 3.5 percent charged.

At CardFellow, we call it the “OptBlue oversight” and it’s an oversight that can add up quickly. If you’re continuing to pay 3.5 percent per transaction when you could be paying less, it eats into your bottom line.

How to Tell if You’re Paying Too Much

The easiest way to tell if you’re paying too much for American Express is to examine your processing statement carefully. Is your cost to take Amex out of whack when compared to Visa and MasterCard? Are you still paying around 3.5 percent on all of your American Express transactions? If the answer to either of those questions is “yes” it’s worth looking into it a little further.

Unfortunately, any processor could choose to play these games with your American Express pricing, so we’re not able to provide a list of offenders. It’s also worth noting that there are ethical processors out there, too and that they aren’t necessarily overcharging.

Situations Where OptBlue Doesn’t Apply

OptBlue pricing is only available to businesses that process $1 million or less per year in American Express transactions. If you process more than that, you’ll need an account directly with American Express and may be able to negotiate your pricing.

At the time of publication, Chase Paymentech is the largest processor that has not yet switched to OptBlue. Businesses processing through Paymentech may be paying the old rates (around 3.5 percent) until such time as the company switches.

Is It Worth It to Take American Express?

In the past, business owners have struggled with this question. On the one hand, allowing as many methods of payment as possible reduces barriers to sales. Additionally, while declining Amex in a retail store might not be a big deal, it can prove much trickier if you sell business-to-business and your clients want to use corporate Amex cards. On the other hand, taking American Express was often prohibitively expensive for some smaller businesses.

OptBlue can help with the latter. The reduced fees bring Amex acceptance costs much closer to what the other card brands charge. As long as you work with a credit card processing company that fairly and competitively prices your Amex transactions, there’s no reason not to accept the Amex. Indeed, consumers that use American Express often prefer that card, and Amex itself states that its cardholders spend more.

The trick is to find (and keep) a processor that will offer fair and competitive pricing for all of your transactions, but particularly American Express. It’s too easy for some companies to use deceptive pricing tactics to take advantage of business owners’ lack of knowledge about OptBlue.

Be sure to ask questions about anything you don’t understand, and shop around for the best options. Credit card processing comparison sites offer a great starting point for reviewing quotes specific to your business so you can see exactly what you’d pay to take Amex. If you’re already taking Amex, get out your statement to check if you’re paying too much. It might be time to shop for a new processor.

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