American Express is one of the sole credit card companies that isn’t as widely accepted at retail stores as some of the other providers, like Mastercard and Visa. However, Amex is still a major credit card company with millions of customers around the U.S. and world. This leaves many people wondering why these people can’t use their Amex cards wherever they want.Turns out, sometimes accepting American Express just costs too much for merchants to make it worth it.
Are you looking for a new credit card? Check out SmartAsset’s list of the best credit cards.
Why So Few Retailers Accept American Express
You may not know this, but merchants have to pay credit card companies a fee in order to accept any credit card. Of course, merchants choose to offer this service because it’s better for their customers and better for business. But for every credit card transaction, they pay an interchange fee to the credit card issuer, costing them money.
All credit card issuers charge a fee, but not all issuers charge the same fee. Because of this set up, merchants can choose which credit cards they want to accept. The different fees often make or break a deal for a merchant. This is why many merchants, especially small businesses, don’t accept American Express. American Express’ interchange fee is just too high.
Providers like Visa and Mastercard charge between 1.15% and 2.5%, while Amex charges merchants between 1.43% and 3.3%. While this may not seem like a huge difference, it can pose a difficult situation for smaller businesses. Sometimes that extra 1% or so isn’t worth the profit they may or may not gain. Evenlarge retailers that make hundreds of thousands of dollars a day could lose moneyfrom constantly paying Amex fees.
Businesses consider a bunch of different factors when deciding whether to accept American Express or not. Often this includes the business’ size, its markups and the number of transactions it makes per day. When merchants forgo American Express, they usually rely on their customers to have another way to pay, whether by Visa, debit card or cash. They’re usually right.
Why Is American Express More Expensive?
So instead of being left out, why doesn’t American Express just lower its fees to match those of its competitors? Well, American Express relies on these fees, and other income streams, to make money. 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 productsaren’t designed to generate interest. The company requires cardholders to pay their balance in full each month. Instead, American Express charges highannual fees, which its largely affluent client base can pay. In turn, merchantsknow whether American Express’ clientele will shop at their store or not which will determine whether they’ll accept Amex or not.
Why Use American Express?
American Express may not be accepted everywhere, but there’s a reason it remains so popular among customers. For one, Amex credit cards can come with incredible rewards. Not only can you earn points, but you can use those points for great rewards like free flights and hotel stays.Plus, depending on your spending habits, the annual fees almost always come out in the wash. As always, just be sure to use your creditcard wisely, spending only what you can afford.
As for merchants, it’s entirely up to each merchant whether it want to accept Amex or not. Most of the time, paying the higher fee just isn’t worth it. Either the merchant’s clients don’t use Amex anyway, or the profit it could earn from Amex holders isn’t significant enough. However, it could be worth it to run the numbers or even a trial run. Some small businesses, depending on prices and clientele, can benefit greatly from accepting Amex.
Bottom Line
There’s nothing wrong with already having an American Express card. It might even be your favorite! Just prepare ahead of time to offer another form of payment at places where your card isn’t usable. Many Amex cardholders do have a second credit card, whether Visa or Mastercard, as a backup. Of course, you can alsouse cash or a debit card, whatever works better for you and your finances.
Tips for Managing Your Finances and Credit
- Your long-term financial plan and credit often go hand-in-hand, as many financial goals, like owning a home, require good credit. A financial advisor can help with all of this. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- When comparing credit cards, you will also want to look at each card’s annual fee and APR. While there are no fee credit cards, there are also a handful of them that do charge some pretty high annual fees. You’ll have to decide whether the rewards and perks those cards offer make the annual fee wholly worth it. Also be sure to take a look at a card’s interest rates. You should be paying each bill in full and on time to avoid interest, but sometimes that’s not always possible. It can lessen the bite if you get a credit card with a lower APR.
Photo credit:©iStock.com/adamdodd,©iStock.com/valentinrussanov,©iStock.com/Oliver Hoffman
FAQs
All credit card issuers charge a fee, but not all issuers charge the same fee. Because of this set up, merchants can choose which credit cards they want to accept. The different fees often make or break a deal for a merchant. This is why many merchants, especially small businesses, don't accept American Express.
Which places don't accept American Express? ›
Places Where American Express is Not Accepted: Cuba, Sudan, South Sudan, Iran, Syria. Major Retailers That Accept American Express: Amazon, IKEA, Sears, Target, Walmart, Lowe's, Apple, Best Buy, Staples, CVS. Major Retailers That Don't Accept American Express: Costco, small non-chain stores/restaurants.
Why does American Express have a bad reputation? ›
Historically, American Express charged higher fees than their competitors, making their cards less attractive to merchants. Merchant funding was also a slow and painful process – in 2006 it took a full three to five business days for merchants to receive money from American Express transactions!
Why American Express is not allowed? ›
To maximize profits and reduce costs on card processing fees, many small businesses accept only Visa, MasterCard, and to a lesser extent Discover. While American Express has been gaining in acceptance, the perception of high fees is a major reason American Express is not accepted everywhere.
What is the hardest American Express card to get approved for? ›
Why it's one of the hardest credit cards to get: The hardest credit card to get is the American Express Centurion Card. Known simply as the “Black Card,” you need an invitation to get Amex Centurion.
Why isn t American Express accepted in a lot of places? ›
The different fees often make or break a deal for a merchant. This is why many merchants, especially small businesses, don't accept American Express. American Express' interchange fee is just too high. Providers like Visa and Mastercard charge between 1.15% and 2.5%, while Amex charges merchants between 1.43% and 3.3%.
Does anyone accept American Express anymore? ›
Within the U.S., American Express touts a 99% acceptance rate among merchants that accept credit cards. That generally includes most major retailers and restaurant chains, as well as several small businesses.
What is the downside of American Express? ›
Due to higher transaction fees than other cards, some merchants won't accept Amex cards. You can't get an Amex card without at least a good (670 or higher) credit score. Annual fees for Amex cards can be high. You must pay the balance on Amex charge cards in full each month, so you can't use them to “borrow” money.
Is Amex still prestigious? ›
Using an American Express card, or Amex card, can imply a certain level of prestige and exclusivity. Amex cards often earn big rewards and, in some cases, come with ultra-high annual fees.
Is Amex a bad credit card? ›
American Express credit cards also require good credit or better for approval, and they often come with high fees. However, American Express is not a bad credit card company overall. Many Amex credit cards have excellent rewards and other worthwhile benefits.
Then on the customer side; not everyone appreciates them. This is because they have a higher annual percentage rate (APR) than its competitors. The average APR for an Amex card is 16.49%, while the average APR for Visa and Mastercard is 13.86% and 14.51%, respectively.
Does McDonald's take American Express? ›
Credit & Debit Charges
You can register Visa, MasterCard, American Express and Discover cards in the app. Payment cards registered must be issued by a U.S. bank.
Does Amazon accept American Express? ›
Amazon Pay accepts credit and debit cards. Credit cards currently accepted include Visa, Mastercard, Discover, American Express, Diners Club, and JCB. The Amazon.com store card is available for use with selected merchants. In some circ*mstances, you might be limited to using Visa and Mastercard credit cards.
What's the easiest Amex to get approved for? ›
The easiest American Express cards to get are those that require a minimum of good credit for approval as opposed to excellent credit only. The Blue Cash Everyday® Card from American Express and the American Express Cash Magnet® Card are two of the easiest Amex cards to get because they only require good credit.
What is the most powerful credit card? ›
What is the most prestigious credit card? One of the world's most prestigious credit cards is the Centurion® Card from American Express*. Though there may be other cards with more elaborate benefits, those cards are kept well under wraps.
What is the highest Amex limit? ›
There is no way to know how high American Express credit limits are as Amex doesn't disclose this information in their cards' terms and conditions. Your credit limit will depend on your credit history, debt level, income, and payment history on other American Express cards.
Where do Amex cards not work? ›
While most places in the U.S. do take Amex, it's worth keeping in mind that some major retailers, like Costco, don't accept it. At Costco, your best bet is the $0 annual-fee Costco Anywhere Visa® Card by Citi*, which doubles as a membership card with cash-back benefits.
Does Walmart not accept American Express? ›
Does Walmart accept American Express? Yes, Walmart does accept American Express credit cards, debit cards and gift cards. In addition to American Express cards, Walmart accepts cards from the three other major card networks.
Does Target not accept American Express? ›
Target stores
Third-party credit cards: Visa®, Mastercard®, Discover®/Novus®, American Express®, credit cards from foreign banks (JCB Japanese Credit Bureau), Diner's Club International, and FSA/HSA cards are redeemable for FSA/HSA eligible items.
Can you use an American Express anywhere? ›
You can use your Card anywhere American Express® Cards are accepted. There are a variety of ways you can use your Card to make purchases. Here are some tips: In-store: If a merchant asks you to choose between "credit" and "debit," choose "credit." No PIN is required for in-store purchases.
