Why American Express Isn't Accepted at Small Businesses.

Updated: Jan 6

There is something about the relationship between American Express and Small Business that did not make sense. We did some digging and here is what we found.

The symbol “R” in a circle signifies that a trademark has been registered in the U.S. Patent and Trademark Office. American Express has trademarked “Small Business Saturday” / “Shop Small” / “ByBlack”. American Express (AMEX) is a multinational corporation that is headquartered in Manhattan, New York City. Amex was founded in 1850, publicly traded and has upwards of 63,700 employees. According to Amex's 10K in 2020, they produced $36,087,000,000 in revenue. In 2017, Amex was named the 23rd most valuable brand in the world, highest in financial services and was given an estimated brand net worth of 24.5 billion. Why are we letting a giant corporation own small business support? And here is the kicker, we interviewed small business owners and discovered… small businesses reject accepting American Express.

Merchants (small businesses) have to pay credit card companies a fee in order to accept any credit card. Businesses choose to do this because it is better for their customers when they can accept all credit cards. For every single credit card transaction, they pay an interchange fee to the credit card issuer, which costs them money. However, not all fees are equal.

Visa and Mastercard charge between 1.5%-2.5%, while Amex charges merchants between 2.5%-3.5%. This may not seem significant; however, the extra 1% or 2% will erode profits. Amex will not lower their fees because this is their primary income source, which contributes to their profits and stock prices. In contrast, Visa and Mastercard make most of their income from interest rates. We recently spoke to one of our small businesses listed on our site; they privately disclosed to us that they are charged 5% for Amex transactions over certain dollar thresholds. This small business explained they will NEVER accept Amex, simply due to the high interchange fee. So why if Amex won’t lower their fees, should we allow them to dictate the narrative behind “Small Business Saturday” and “Shop Small?”

American Express leans heavily on large annual fees attached to their credit cards, which much of their core customer base has accepted. In exchange for their annual fees customers are rewarded with perks, such as airline miles, Cashback and other rewards. Amex is not a bad credit card, but it is bad for small businesses.

FULL DISCLOSURE: The writer of this blog has an American Express Credit Card. Following the detailed investigation that lead to this article, it won't be used at a small business again.

American Express 10K: https://d18rn0p25nwr6d.cloudfront.net/CIK-0000004962/0dc0103f-bd50-40bc-83fd-8a741f073c15.pdf

48 views0 comments