One thing missed from the analysis you're all doing here is that AMEX is a three party system, not a traditional four party system. In a typical transaction, interchange is the amount that acquiring bank pays issuing bank out of the transaction, but the merchant is charged more than that by acquiring bank - if the interchange is 1.3%, the merchant is likely charged more along the lines of 1.8%-2.3%. In AMEX case, they are both the issuer and acquirer, so they collect the entire merchant fee. Based on this, they've even managed to reduce their merchant fee in Australia for small businesses to 1.5% (on the provision that you get shoved straight back up to 2.8% if you surcharge more than Visa and MasterCard).