When merchants forgo American Express, they usually rely on their customers to have another way to pay, whether by Visa, debit card or cash. So instead of being left out, why doesn’t American Express just lower its fees to match those of its competitors?
This is a different business model from those of Visa and Mastercard, who make much of their money from interest rates.
American Express does make interest income, but many of its products aren’t designed to generate interest.
The exact percentage can fluctuate, but American Express still charges over 2.5%.
While 2.5% – 3.5% may not seem like a lot, especially compared to Visa’s 1.5% – 2.5%, it can pose a difficulty for smaller businesses.
Either the merchant’s clients don’t use Amex anyway, or the profit it could earn from Amex holders isn’t significant enough.