Merchant discount rates: AMEX vs Visa/MC
Jan 27, 2010, 1:49 pm
#1
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Merchant discount rates: AMEX vs Visa/MC
Are AMEX rates really that much higher than Visa/MC's for small businesses? I was surprised to read that MasterCard rates can be as high as 3% - 4%, as per the article in the WSJ:
http://online.wsj.com/article/SB1000...Tabs%3Darticle
http://online.wsj.com/article/SB1000...Tabs%3Darticle
Jan 27, 2010, 2:00 pm
#2
Join Date: Oct 2007
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Are AMEX rates really that much higher than Visa/MC's for small businesses? I was surprised to read that MasterCard rates can be as high as 3% - 4%, as per the article in the WSJ:
http://online.wsj.com/article/SB1000...Tabs%3Darticle
http://online.wsj.com/article/SB1000...Tabs%3Darticle
You're right that they can be "as high as" 3-4%.
but Amex's can be "as high as" 7%.
Plus, some merchant agreements stipulate a minimum fee and/or base fee which can be "as high as" 25-75cents, which is why some places have a sign that says "credit cards from $5.00 only", or similar.
If they are being charged $0.50 on a $2.00 newspaper and a candybar, that's 25%, which makes no fiscal sense for the merchant to lose money on such a transaction.
Most larger merchants have better agreements, however.
Jan 27, 2010, 2:11 pm
#3
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It's worth also reading this recent NY Times articles which traces how VISA increased their debit card market share by raising fees:
http://www.nytimes.com/2010/01/05/yo...s/05visa.html?
Jan 27, 2010, 2:27 pm
#4
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Does AMEX charge different fees for different cards since each offers different rewards (green vs gold vs plat charge OR vs credit cards)?
Jan 27, 2010, 2:33 pm
#5
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It's worth also reading this recent NY Times articles which traces how VISA increased their debit card market share by raising fees:
http://www.nytimes.com/2010/01/05/yo...s/05visa.html?
When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code.
The difference is so large that Costco will not allow you to sign for your debit purchase in its checkout lines.
Jan 27, 2010, 2:46 pm
#6
Join Date: Jan 2000
Posts: 3,020
Are AMEX rates really that much higher than Visa/MC's for small businesses? I was surprised to read that MasterCard rates can be as high as 3% - 4%, as per the article in the WSJ:
http://online.wsj.com/article/SB1000...Tabs%3Darticle
http://online.wsj.com/article/SB1000...Tabs%3Darticle
Jan 27, 2010, 3:21 pm
#7
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I don't know about others, but my clients who use AX are usually better clients than those who use MC or VS. They usually spend more on higher end stuff.
Jan 27, 2010, 3:49 pm
#8
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I was a little surprised by the comment regarding Costco in the NY Times article. I thought Costco only took American Express cards, but there are no AMEX debit cards, correct?
When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code.
The difference is so large that Costco will not allow you to sign for your debit purchase in its checkout lines.
When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code.
The difference is so large that Costco will not allow you to sign for your debit purchase in its checkout lines.
Jan 27, 2010, 4:51 pm
#10
Join Date: Jan 2007
Posts: 13
I was a little surprised by the comment regarding Costco in the NY Times article. I thought Costco only took American Express cards, but there are no AMEX debit cards, correct?
When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code.
The difference is so large that Costco will not allow you to sign for your debit purchase in its checkout lines.
When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code.
The difference is so large that Costco will not allow you to sign for your debit purchase in its checkout lines.
Jan 27, 2010, 5:09 pm
#11
Join Date: Jul 2009
Location: Los Angeles, CA
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I was a little surprised by the comment regarding Costco in the NY Times article. I thought Costco only took American Express cards, but there are no AMEX debit cards, correct?
When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code.
The difference is so large that Costco will not allow you to sign for your debit purchase in its checkout lines.
When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code.
The difference is so large that Costco will not allow you to sign for your debit purchase in its checkout lines.
I imagine it is that they two companies have negotiated an agreement that combines an exclusive relationship with low % fee or even potentially a flat fee plus a %. I would be interested to hear it if someone has any better insight.
I do know/realize that contracts are kept very secret.
Jan 27, 2010, 5:21 pm
#12
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Jan 27, 2010, 8:51 pm
#13
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Does any member of FT have any insight on why Costco only accepts AMEX?
I imagine it is that they two companies have negotiated an agreement that combines an exclusive relationship with low % fee or even potentially a flat fee plus a %. I would be interested to hear it if someone has any better insight.
I do know/realize that contracts are kept very secret.
I imagine it is that they two companies have negotiated an agreement that combines an exclusive relationship with low % fee or even potentially a flat fee plus a %. I would be interested to hear it if someone has any better insight.
I do know/realize that contracts are kept very secret.
Costco used to be Discover only, but they signed a deal a few years back to exclusively accept AMEX in stores. In their online store, they can accept other cards, but in-store credit card purchases are restricted to AMEX cards. Debit cards can be used ( I believe as mentioned above for non-signature i.e. pin transactions).
I don't recall what the exact agreement was, but i'm guessing it resulted in a discounted merchant fee for each transaction etc. along with the costco branded amex card etc.
Jan 27, 2010, 9:22 pm
#14
Join Date: Oct 2008
Location: New York, NY
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Costco probably accepts debit cards because of the fact that when you choose PIN instead of signature, it is no longer done over the Visa or Mastercard network but instead over other networks such as STAR or PULSE. If you look at the back of your debit card (not credit card), you will probably see one of these logos. This is a different network than Visa/MC and typically incur lower fees for the merchant.
Jan 27, 2010, 9:23 pm
#15
Join Date: Jul 2009
Location: Los Angeles, CA
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Posts: 280
Costco used to be Discover only, but they signed a deal a few years back to exclusively accept AMEX in stores. In their online store, they can accept other cards, but in-store credit card purchases are restricted to AMEX cards. Debit cards can be used ( I believe as mentioned above for non-signature i.e. pin transactions).
I don't recall what the exact agreement was, but i'm guessing it resulted in a discounted merchant fee for each transaction etc. along with the costco branded amex card etc.
I don't recall what the exact agreement was, but i'm guessing it resulted in a discounted merchant fee for each transaction etc. along with the costco branded amex card etc.
