It's a common belief that MasterCard and VISA are cheaper for merchants than American Express. This is the case because MC/VISA promote their "discount rate" (that being the percentage they take of each transaction) as somewhere between 1.5% and 3%, whereas American Express's published discount rate is usually well over 3%. Seems like easy math, right? Well, it's not. You see, with American Express you as the merchant only pay the discount rate, but with MasterCard and VISA you will typically pay the discount rate plus whatever else it costs them to process that transaction. And the "whatever else" (also called "interchange fees") includes the costs of all those airline miles, hotel points, cashback bonuses, etc., that benefit the cardholder. Yep, you read that right: you as the merchant are directly charged for this on top of whatever percentage of the transaction you're already paying. Don't believe us? Well, check your statments for those extra fees. We'll wait.
Yep. We did the math, too. And because nearly everyone we deal with these days uses a loyalty or bonus card of some type our effective cost of each MasterCard or Visa transaction was 4.79%, way higher than the 3.2% American Express charges us.
But fret not — you can always call your bank and see if they'll lower your rates down. But if not, then don't hesitate to sign up for American Express and allow your customers to use it. You may save quite a bit of money by doing so (but, as with anything like this, please do your own math so you're aware of what your particular situation is).