Don’t Accept American Express at your Business? Talk about Pound Foolish!
Everyone has heard it before… we don’t accept AMEX here- the rates are too high. This is usually in response to someone charging a three dollar latte at the local coffee shop. Let’s do a little comparison to show how foolish this decision is:
The business in question is a small local market that sells coffee and breakfast. Let’s figure that they do $5000 in gross monthly sales via credit cards. We’ll work with Visa first.
- 2% discount rate = $ 100 monthly in discount fees
- 20 cents per transaction. Let’s assume that their average ticket is $9. That means the store has approximately 555 transactions montly for an additional $111 per month.
Total fees exclusive of machinery, chargebacks, etc.: $211 per month.
Now for American Express:
- 3.25% discount rate = $162.50
- No per transaction fee; instead pay $6 per month all inclusive
Total: $168.50
Someone please explain how a business should not accept American Express given the metrics? Talk about shooting yourself in the foot.
It’s even worse when the numbers grow. What I have found is that because of the per-item charges, the total percentage between discount and per-item fees approaches 9% using Mastercard and Visa’s fee system. That’s ridiculous. It should be the other way around- we don’t accept visa or mastercard. Unfortunately, business dictates that you must since checking accounts all use visa/mc for their debit transactions and it’s better to pay a few bucks to get the business….
So to all you business owners who do not accept AMEX, you are losing a tremendous amount of business and paying more to exclude AMEX patrons. WAKE UP!!