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American Express to Cut Interchange Fees to Increase Acceptance Rate

How many times have you tried to use your American Express credit card at a retailer only to be told: “Sorry for the inconvenience, but we do not accept American Express?” The reason that many U.S. and European merchants do not accept Amex cards is the higher-than-average interchange fees.

In an effort to encourage more businesses to accept its cards, American Express is lowering merchant fees for the first time in 20 years.

Amex card network charges an average of 3 percent for every transaction, and the competing Visa and MasterCard networks charge merchants an average of about 2 percent in fees. So, to increase the acceptance rate, Amex is implementing fee cuts to about 2.37 percent, according to the Financial Times, effective later this year.

American Express is a sole issuer of co-branded Delta Air Lines, Hilton Hotels and Starwood credit cards. A higher acceptance rate can not only attract more customers but also encourage many current cardholders to keep their co-branded point-earning credit cards long-term.

Additionally, it will become easier for card members to reach minimum-spending requirements when more merchants start accepting Amex credit cards, especially small businesses.

Amex’s new chief executive Stephen Squeri said his plans to make up for the lost revenue include more lending, as about 20 percent of the company’s 2017 revenue was generated by interest, according to the Financial Times.

“More places for our card members to use our products means more revenues—from both spending and lending,” Squeri told the Financial Times.

With some Visa credit cards, such as Visa Signature Preferred and Visa Infinite, already charging as high as 2.40 percent in interchange fees on certain transactions, it’ll be interesting to see how many new businesses will start accepting Amex with the 2.37 merchant fee. If Amex’s plan works and more shops accept the terms, card usage could increase drastically.

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7 Comments
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DesertBruce March 21, 2018

I have always refused to have a card that charges the user a fee just ot have it.

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emvchip March 21, 2018

mikesyr18, why will Amex's interchange rate reduction cause you to cancel your credit cards?

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februaryfour March 20, 2018

I’m confused as to why mikesyr18 thinks this is bad.

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alexmyboy March 20, 2018

Hilton points

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luftair March 20, 2018

Daylight robbery, in Europe credit card fees are regulated and it’s only 0,3% !!