why is american express not accepted

Why is american express not accepted

Visa and MasterCard dominate the market when it comes to credit cards that retailers accept as methods of payment. In comparison, it sometimes seems that American Express and Discover are shunned by merchants. In 2015, Visa cards accounted for nearly 56 percent of all purchase transactions worldwide, and MasterCard accounted for almost 26 percent of transactions. American Express, however, accounted for just over 3 percent of transactions, and Discover accounted for less than 1 percent, according to the Nilson Report.

To understand the differences among the credit cards and how they might affect you as a cardholder, learn how credit card fees and other factors contribute to the more limited acceptance of Amex and Discover cards and how these two cards position themselves against competitors.

Why You Still Can#8217;t Use an Amex or Discover Credit Card at Some Stores

Of the #8220;Big Four#8221; credit cards #8212; Visa, MasterCard, Amex and Discover #8212; Amex is the oldest, founded in 1850 through the Dow Jones industrial average, and Discover is the youngest, first offered by Sears in 1986. In the past, Amex and Discover marketed themselves as more exclusive than other credit cards on the market; previously, both cards were symbols of exclusivity, with a limited number of retailers accepting them.

Technically, the limited acceptance of the two cards is not a matter of retailers rejecting them as a form of payment; rather, Amex and Discover are different from other credit cards because merchants must choose to accept them.

Compared with MasterCard and Visa, Amex and Discover target a more specific group #8212; generally, more affluent customers #8212; and charge higher merchant credit card processing fees. It is these more costly credit card processing fees that prevent some businesses from choosing to accept Amex and Discover at their cash registers.

The credit card processing fees for Visa and MasterCard currently range from about 1.10 percent to 2.95 percent. Historically, Amex has charged higher than its competitors #8212; the highest fees of any credit card company.

Related: The Top 9 Most Exclusive Black Cards You Don#8217;t Know About

Amex makes its money on annual fees charged to cardholders and swipe fees charged to merchants, which is why they charge a high processing fee compared to Visa or MasterCard. The added revenue for cards like Amex and Discover goes into investing in features like premium rewards and other perks for cardholders.

Amex and Discover work differently than MasterCard or Visa: Amex and Discover market and issue their cards directly to the cardholder. Amex operates on what it calls a #8220;closed loop network#8221; and provides the full range of credit card services, serving in four roles:

The closed loop network #8212; the same strategy that Discover uses and that MasterCard and Visa do not use #8212; allows Amex to see the payment transactions from both the perspective of the cardholder and the merchant, and craft more targeted offers to cardholders. Amex places emphasis on customer service, points and rewards. And Discover is notably generous in its return policy: If a cardholder is unhappy about his purchase, Discover will refund the purchase price up to $500 on eligible items if the original store will not accept the return within 90 days of purchase.

Compared with MasterCard and Visa, Amex focuses on more affluent consumers in its business model, according to Justin Warren of ChargeSmart, an online bill payment service. Merchants benefit from accepting Amex because these affluent consumers are more likely to spend more and give those merchants repeat business.

Read: Best Loyalty Rewards Programs for Your Wallet

How Merchant Acceptance Works for Visa and MasterCard

Unlike Amex and Discover, Visa and MasterCard do not issue credit cards. That#8217;s because both Visa and MasterCard are credit card processors, not card issuers; Visa and MasterCard operate as financial middlemen, providing the technology and the networks to power transactions.

#8220;Visa and MasterCard make their money from processing transactions,#8221; said Miranda Marquit, a financial journalist and money expert. #8220;They receive money each time you swipe your card, and [might] also receive other fees from merchants that use their payment processing networks to accept credit cards.#8221;

Visa and MasterCard transactions involve a total of three different parties:

  • An acquiring financial institution: the retailer#8217;s bank
  • An issuing financial institution: the bank that issued your credit card and provides you with a line of credit #8212; for example, Chase or Citibank
  • The network between both financial institutions: Visa or MasterCard

Every time you use your Visa or MasterCard credit card, the charge is submitted through the retailer#8217;s bank or financial institution, which must request approval from your financial institution #8212; the card issuer #8212; to verify that you have not reached your credit limit. Visa and MasterCard also reach a wider audience than Amex and Discover by working with a variety of banks that offer Visa- and MasterCard-branded debit cards for checking accounts.

Spending Abroad With Your Discover or Amex Card

Although they#8217;re not as popular with retailers as MasterCard and Visa cards, Amex and Discover cards are now widely accepted within the U.S., Canada and Mexico. Amex and Discover are becoming increasingly accepted in other countries, too, but cardholders might still find that fewer retailers accept these two forms of payment compared with MasterCard and Visa. If you#8217;re traveling beyond these three countries, check with the Amex and Discover credit card websites or customer service representatives to see where your card will be accepted abroad.

Read: Best Travel Rewards Credit Card Offers of 2016

Choosing and Charging Wisely With Amex or Discover

Amex and Discover cards are now more widely accepted than they ever have been, yet some merchants still refuse to accept these credit cards because of their higher processing fees. Amex has also traditionally charged an annual fee as part of its strategy to target more affluent customers, which keeps some potential cardholders away. The annual fee can be a significant cost: The Amex Centurion card charges an annual membership fee.

Still, Amex and Discover could be the right options for credit card users: Amex prioritizes customer service, points and rewards #8212; plus perks like free concierge services and travel rewards that could make the fees worthwhile for the right customer #8212; for their cardholders, and Discover offers customers a hard-to-beat refund guarantee and compelling cash-back rewards.

If you have an Amex or Discover card in your wallet, enjoy your perks. But when using credit cards to make payments online or in-store, it#8217;s best to be prepared: Have your Visa or MasterCard on you just in case, or you might be stuck with an unusable credit card, and a bill you#8217;re not able to pay #8212; even if you can afford to.

Ruth Sarreal contributed to the reporting for this article.

If you’re an American Express card member, you#8217;ve probably heard this before: #8220;Sorry, we don#8217;t take American Express.#8221; It#8217;s an inconvenience and an annoyance for you, but have you ever wondered why some retailers don#8217;t take AmEx? Turns out that while your card earns great rewards for you, it can be pretty costly for merchants.

The basic reason that many retailers – particularly small businesses – won’t accept American Express is because of the fees the company charges businesses when customers swipe their card. AmEx charges a retailer around 3.5% whenever a customer pays with one of their cards; by contrast, Visa and MasterCard charge around 2-3%, and sometimes less for debit cards. While this may not seem like much, many small businesses operate low-margin businesses where even a percentage makes a difference.

So why does American Express charge higher swipe fees, especially if it knows that so many retailers won’t accept the card because of them? The short answer to this question is that American Express has a slightly different business model compared to many other credit card issuers.

In general, most credit card companies make their profits from interest charges. But American Express relies on annual fees charged to customers and swipe fees from merchants to make money. This means that the company is unlikely to lower the fees it charges retailers, unless they were to undergo a major change to the way the company operates.

It’s also important to note that American Express is popular among a wealthier clientele. Most AmEx customers are shopping primarily with plastic, and in stores that gladly accept their preferred credit card. These big spenders are generating plenty of income for the company through the swipe fees they rack up – according to the Wall Street Journal, American Express’s profits rose by 4.9% in the second quarter of 2013 alone.

Between high annual fees and spotty retailer acceptance, many customers wonder if it’s worth it to own an American Express card. The answer to this question largely depends on the kind of lifestyle you lead and the perks you’re looking for in a credit card.

For example, The Platinum Card® from American Express is often panned for its high annual fee, and $550 is hardly chump change. But if you frequently travel internationally, that fee could end up paying for itself. This is because with this card you’ll have free access to over 1,000 airport lounges worldwide, a privilege that would cost about $400 if purchased on its own. Add this to the savings you’ll get with the annual $200 airline fee credit and $200 Uber credit, and that $550 fee doesn’t seem so bad.

That said, it#8217;s generally a good idea to carry a backup no annual fee Visa or MasterCard for those instances where AmEx isn#8217;t accepted.

The takeaway: The reason that American Express isn’t accepted at all retailers is because of its high swipe fees, compared to other credit cards. AmEx uses these fees to make the bulk of its profits, so its unlikely they’ll lower them anytime soon. However, this doesn’t mean that it’s useless to get an American Express card. Consider all your options to figure out which type of plastic is right for you.

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Why is american express not accepted

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What is the difference between Visa and MasterCard?

We recommend you read:

How to choose a credit card that suits you

Why is american express not accepted

There is now little between Visa and MasterCard apart from small differences in:

Where they are accepted

Their security schemes

Their card benefits

Visa and MasterCard are companies that process the transactions you make when you spend on your credit, debit or prepaid card.

Although their logos appear on these cards, you will probably never need to deal with Visa or MasterCard yourself. Neither company provides you with a card, lends you money, runs your account or takes monthly payments from you.

Visa and MasterCard provide their services to your card issuer, which is the bank or other company that is named on your card and dealt with your application. It is your card issuer that deals with you as a customer and sets your card's terms.

This is what Visa or MasterCard do when you use your card:

They check with your card issuer if the transaction should be accepted or declined

They confirm to the company accepting your payment if it can be made

They process the payment between your card provider and the retailer

There is a wide variety of Visa, MasterCard and American Express cards offered by prepaid, credit and debit card issuers. They come with a range of features and benefits, so look at these instead of whether the card has a Visa or MasterCard logo on it.

If you want a credit card, choose one that fits your circumstances; here is what you can use each type of credit card for.

If you need a debit card, you should base your choice on which current account offers what you need.

How to get a MasterCard or Visa

Once you have chosen the card that fits your needs, you can apply through the card issuer or bank - not through Visa or MasterCard.

Where can you use MasterCard or Visa?

They are both accepted by more than 20 million merchants in more than 150 countries.

It is very rare to find a location where one is accepted but not the other. Both can be used almost anywhere that accepts card payments in the UK and online.

If you travel frequently and want to use your card abroad, check if your destination country tends to favour one card type over another, although most places accept Visa and MasterCard equally.

Do they offer protection online?

Both Visa and MasterCard offer protection when you shop online.

MasterCard protects customers from card fraud with its SecureCode scheme, and Visa uses its similar Verified by Visa scheme for extra security.

Both allow you to set up a password that must be entered along with your card details to complete the transaction when you shop online.

If you have a credit card, most of its benefits like cashback or air miles come from your card issuer rather than MasterCard or Visa.

However, both offer deals and promotions that are only available to people who use their debit, credit or prepaid cards:

MasterCard offers exclusive discounts and tickets to its customers and other premium benefits if you hold a World Elite MasterCard

Visa offers benefits like travel, dining and shopping discounts with their premium products

American Express (Amex) is another company that offers a payment network to card issuers, providing the same service as Visa and MasterCard. However, they issue their own prepaid and credit cards too.

This means you can take out a card from American Express directly, or you can take out an Amex card from another card provider.

American Express credit cards often offer the best cashback, air miles and other rewards on spending.

They can offer these rewards because they charge retailers a higher transaction fee than Visa or MasterCard. However, this means Amex cards are not accepted for payment everywhere, especially by smaller businesses.

You could use your American Express card wherever possible to collect cashback or air miles, and use a Visa or MasterCard as backup where your Amex is not accepted.

Discover Cards and Diners Club charge cards are accepted for payment by some UK businesses, but are generally not given to UK customers by card issuers.

Can you choose if you get a MasterCard or Visa?

Most cards are only available as a Visa or MasterCard and do not let you choose one or the other.

However, if you want a credit card that uses a specific payment network, use our comparisons that separate Visas and MasterCards:

Most U. K. merchants do not accept American Express Card - United Kingdom Forum

I spent 30 days in Scotland, England and Wales last month (August 2013) and was quite dismayed by how FEW businesses and hotels accept American Express. Almost 90 percent of our purchases had to go on the Visa card.

Why is american express not accepted

Why is american express not accepted

Probably because Amex isn#39;t as popular in the UK, therefore it isn#39;t widely accepted.

This might be useful for future reference:

Any semi decent guidebook would have told you that.

Most travellers aren#39;t dismayed9quot; because they have done their research before they travel. The card is simply not beneficial to the retailer.

- Amex charges a much higher commission rate than Mastercard and Visa

- Anyone in the UK who has an Amex card is bound to also have a Visa card or a Mastercard or both

There is, thus, very little incentive for retailers to accept Amex.

It#39;s probably best not to assume that a particuler card will be widely accepted when travelling to a different part of the world. Do some research wherever you are going to ensure that you are carrying the most appropriate cards for that region or country.

Hi Ida, and welcome,

Not only do American Express charge a higher % than other card companies (how do you think you get the various reward points etc.?), they also keep the business waiting sometimes up to a few months for their money. Supermarket and petrol station chains usually take Amex but they are large enough to force the Amex rate down.

Hope you enjoyed the holiday apart from that

how FEW businesses and hotels accept American Express. Almost 90 percent of our purchases had to go on the Visa card.

So you paid for your purchases with credit cards, mostly the Visa?

I#39;m not understanding what it is you are dismayed about - the lack of Amex acceptance? Do you work for Amex?

Why should it matter which card is accepted as long as one is?

Why should it matter which card is accepted as long as one is?

It may matter to the OP as they may get better rewards/points using an Amex card.

I use my Amex for miles to enable me to get flights cheaply but I am aware that many places don#39;t accept it which is why I have other cards.

There are many places in the USA that don#39;t accept Amex either.

Good job you didn#39;t bring a Discover card.

Q : Will Apple pay support American express SERVE card?

On the chart it says it supports American express prepaid so American Express just came out about 1yr or less ago of there only prepaid debt card. So the apple pay chart

On the chart it says it supports American express prepaid so American Express just came out about 1yr or less ago of there only prepaid debt card. So the apple pay chart has a **** check on the American express prepaid so why is it not working?

Posted on Oct 22, 2014 1:58 AM

When they first released the chart there was a check mark in the prepaid slot for American Express They have changed it since its initial release.

Posted on Dec 17, 2014 10:05 AM

Q: Will Apple pay support American express SERVE card?

Why is american express not accepted

American Express Serve is a pre paid card.

Apple Pay works with most of the major credit and debit cards from the top U.S. banks.

Pre paid cards are not accepted. Must be a credit or debit card.

Oct 22, 2014 6:04 AM

Oct 22, 2014 11:41 AM

Ya Maybe Apple should take that check off of prepaid on chart then. Becuase there is a check mark for American express and Chase bank prepaid. That would help. But thanks for your respond. I'll just open a bank account then

Oct 23, 2014 12:13 AM

I went out and bought a pre paid serve card because it said it supported it and I have had the exact same issues

Oct 24, 2014 1:47 PM

HAve you registered your card and everything? Iv read online that wells fargo prepaid and chase are confirmed working for some people

Oct 26, 2014 5:05 PM

I just have the temporary card right now and I tried it and it didnt work. I also called American Express I think I spoke with someone that had no idea what I was talking about but she said that they are working on it but as of now it does not work. When I get my real card in a few days I will try again

Oct 26, 2014 5:46 PM

I just called American Express Serve and the guy on the line said it should be supported . Something is strange.

Can someone from Apple please tell me if the issue is on Apple's end or on the American Express end and if I should expect it soon or . maybe they aren't sure. The lack of consistent information is a little confusing. (Mine is not the temporary card . its the full serve card with my name on it etc.)

Thank you for your time.

Oct 28, 2014 5:33 AM

I read in the current documents

2 General purpose reloadable cards from the Visa, Mastercard, and American Express payment networks. Doesn't include merchant gift cards or other non-network gift cards.

and American Express told me the Serve card should work . yet its getting rejected . Any Apple folks want to weigh in to help me on this one?

Oct 31, 2014 8:00 AM

I called them for a close friend of mine who couldn't get it to work. A Serve representative said what seems like a reading off a script, that they are working on including Serve for Apple Pay very soon but there's no exact ETA. Card holders will be getting an email shortly of Apple Pay participation and instruction.