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Our small retail company only accepts Mastercard and Visa. We are considering AmEx, but is it worth paying the higher fees?

Visa vs MasterCard vs Amex For Small Business


Topic Expert
Anand Goel
Title: CEO
Company: Optimized Payments Consulting
(CEO, Optimized Payments Consulting) |

Paying higher fees for accepting AmEx really depends on several variables...
*what is the effective cost of accepting Visa/MC and how does that number compare with AmEx's rate?
*what is your average ticket? You'll see the effective cost of different cards narrow at really high average tickets (greater than $1,000).
*do you sell discretionary goods vs. necessities? If you sell luxury goods then you'd definitely want to accept AmEx because many affluent people carry and like using the AmEx card.
*do you get any push back from your customers for not accepting AmEx?

I would definitely recommend that you accept Discover because cost of Discover is very similar to Visa and MasterCard. Although, Discover has about 4-5% market share in the U.S., Discover owns Diners and has exclusive relationships with card networks in China, Japan, and South Korea. So a Chinese customer can pay you using his China UnionPay card and you can automatically accept that payment because that transaction will run on the Discover network. In other words, accepting Discover automatically gives you access to customers from China, Japan, South Korea and some other international markets.

If you are a small retailer, you can start accepting AmEx and Discover through the same processor that does your Visa and MC payments. You don't need separate contracts or agreements to accept AmEx and Discover. A good processor should be able to accommodate all cards under one contract, one statement, and one funding time frame (your proceeds from Visa, MC, Discover and AmEx sales are deposited into your bank account at the same time, thus making reconciliation much easier). Here's an article we wrote that speaks to this -

Anand Goel
Optimized Payments Consulting

Topic Expert
Mike Caruana
Title: Director of Financial Services
Company: Diamond Resorts International
(Director of Financial Services, Diamond Resorts International) |

Anand is spot on with his suggestions. The additional benefit is that you make yourselves easier to do business with. That's essential. It would be unfortunate for you to possibly lose business - and even worse if it were to a competitor - just because you couldn't accept their payment method.

Ted Monohon
Title: VP -Finance / Controller
Company: Fantex
(VP -Finance / Controller, Fantex) |

Just realize that I find AMEX much more difficult to deal with regarding chargebacks and dispute resolution. They side with their customers pretty much 100% of the time unless you really invest a lot of time and energy into disputing the chargeback.

Sara Voight
Title: Controller
Company: Critical Signal Technologies, Inc
(Controller, Critical Signal Technologies, Inc) |

Although the fees seem higher (until you realize that MC/Visa start with a base rate and it increases depending on the type of card and any potential inter-change fees), there is one fee only. The settlements give you a daily detail of what is happenning.

I also have a different perception of the dispute resolution than Ted. In theater we were almost always successful by keeping our records organized and having clear purchase terms on all of our material. Like any card, the dispute process is annoying and has to be dealt with right away or you lose your rights.

(We also ran a process similar to the gas stations. If you had a group and paid by cash or check, you got a discount per ticket. The full price stood if you paid by credit card. This encouraged everyone to seriously consider immediate payment as opposed to a credit card which could smack us in the rear months later.)

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