The Complete Guide To American Express Interchange Rates & Merchant Fees

For merchants looking to add Amex to their repertoire of payment options, American Express has historically been a challenge. Higher processing rates and the need for separate contractual provisions have deterred many small business owners from bothering with a card brand that only accounts for a small (but still significant) portion of the overall credit card company market share.

However, Amex is an increasingly popular payment option among consumers, so you probably want to offer it despite the cost and complexity. Plus, Amex’s OptBlue program has made it more convenient for small businesses to accept American Express.

In this article, we’ll take a closer look at American Express’ fees and processing rates so that you understand precisely what accepting an Amex card will cost you.

How Amex Fees Work

Amex operates on a closed network system, where American Express functions as both the credit card association and the issuing bank. This is unlike the open network system used by other popular credit card brands, where any bank that signs an agreement with the credit card association (such as Visa or Mastercard) can issue a card using that brand name.

Because of this closed network structure, Amex has a lot more control over how much it charges merchants to process transactions made with American Express cards. At the same time, the company’s closed network isn’t a monopoly, and it still has to make arrangements with the large, direct processors in the industry (e.g., Fiserv, Worldpay, Global Payments, etc.). These arrangements keep processing rates more or less under control, although they’re still generally higher than what you’ll pay to process a transaction from Visa or Mastercard.

Additionally, Amex processing rate structures are different from other networks because the card type has no bearing on the processing rate. With Visa and Mastercard, rewards or commercial cards cost more to process than ordinary debit or credit cards. Not so with Amex. However, industries and merchant categories play a substantial role, and the popularity of the Amex brand in some of those pricier industries also leads to higher fees for merchants.

OptBlue vs. Direct Agreement

There are two main ways for you to accept American Express cards at your business. The first is through the OptBlue program; the second option is through a direct agreement with American Express. Your Amex merchant fee structure will depend, in part, on which option you use.

• OptBlue: OptBlue is a program where processors can accept Amex through their merchant services provider. Basically, Amex offers acquirers wholesale rates. Processors tack on their own markup, the same way they do with Visa and Mastercard, and then provide Amex acceptance as part of their suite of services. This ultimately translates to lower rates for merchants and, in theory, helps create competition. It also means there’s no standardization in rates, so some might charge a good deal more than others.

American Express processing rates shouldn’t be the sole determining factor in choosing a processor. You should look at overall rates (an interchange-plus plan is much better than a tiered pricing plan), any value-added services, and the quality of customer support.

• Direct Agreement: For small merchants, OptBlue is the best means of processing Amex cards. However, once you clear $1 million per year in American Express transactions, you must sign a separate, direct merchant agreement with American Express, not your processor. You’ll find this wording even in the contracts of providers such as Square. Amex gets away with this because it’s a closed network. It has total control, and if you don’t want to sign, no Amex cards for you.

A direct agreement is functionally a secondary, exclusive merchant account. The main difference is that you’ll stop paying your processor’s rates and have to pay Amex’s standard rates instead. They can be much higher than what you were previously paying through your processor. However, most processors can tack your American Express agreement onto their own and allow you to use the same software and hardware to process all of your transactions.

How Much Does American Express Charge Per Transaction?

The amount you are charged per Amex transaction will depend on whether you accept Amex cards via OptBlue program offered by your credit card processor, or if you have a direct agreement with Amex. If you accept Amex using OptBlue, your Amex rates will also vary depending on how much your processor decides to charge for them.

Amex Rates With An OptBlue Agreement

With the OptBlue program, American Express provides standard “wholesale” (interchange) rates to processors, similar to Visa or Mastercard. Rates vary by category and ticket size, usually falling into one of three tiers. Then, the processors go in and add their own additional costs. Some, such as Helcim, offer interchange-plus (which it calls cost-plus) plans, which means there’s a clear, predictable markup. On a tiered plan with another provider, you’ll see more variance in rates for qualified, mid-qualified, or non-qualified transactions.

However, while full disclosure of processing rates is becoming more common, most traditional providers continue to rely on a quote-based system that doesn’t allow you to see the rates you’ll be paying until you’re much further along in the sales process.

Amex Rates With A Direct Agreement

As we mentioned above, a direct agreement with American Express is essentially just opening another merchant account, this one through Amex itself. The company offers two different pricing schemes:

• Discount Rate Plan: The overall structure of the discount rate plan is identical to the OptBlue program. You swipe or dip a card and then you’re charged a percentage of the transaction. That percentage varies by the transaction size and industry.
• Flat-Fee Plan: The alternative to the discount rate plan is the flat-fee plan. With this plan, you’ll pay $7.95 plus a flat monthly fee (which could be substantial) for your processing. The catch is that you must stay within specified terms — which means you need to have a very stable volume of processing from one month to the next or risk incurring additional fees.

American Express doesn’t publish a lot of details about its payment plans, not even its discount rates or how the flat-fee plan is calculated. I assume it’s an average amount based on your processing history. Your transaction fees will also likely depend in part on your industry.

Of course, you’ll also still have to pay a host of additional fees, just like you would with the OptBlue pricing program. For example, in addition to the fees described above, you might also be on the hook for an account maintenance fee, gateway fee, and/or a voice authorization fee.

Are There Any Other American Express Merchant Fees?

While we’ve discussed some of the major incidental fees the company charges above, there are even more that you should be aware of before you add Amex processing to your merchant account. The company’s “American Express Merchant Reference Guide” is your best official source of information on fees, and you can download the latest version from the American Express website.

For more information on card brand fees in general, see our complete guide to card brand fees for merchant accounts.

How Do Square & Other Payment Service Providers (PSPs) Accept American Express?

Square, PayPal, SumUp, and Stripe are all common examples of payment service providers (PSPs). These types of processors offer low-cost, pay-as-you-go processing services to small businesses that might otherwise not be able to afford a traditional merchant account. Individual user accounts are aggregated into one large merchant account, and flat-rate pricing is used to keep overall processing costs predictable.

However, PSPs still have to pay the same wholesale rates to Amex whenever a transaction using one of the company’s cards is processed that you would pay with OptBlue or a direct processing agreement. If you’ve compared the numbers, you might notice that some of the rates charged by American Express are higher than what most PSPs charge for the same transaction. So are PSPs able to negotiate special, lower rates directly with American Express? Not really. For the most part, they simply choose to accept a small loss on some transactions. They know that the uptick in business from accepting American Express will more than make up for the loss on certain transactions.

The Bottom Line On American Express Processing Fees

As we’ve discussed above, American Express differs from Visa, Mastercard, and other major credit card brands by operating in a closed system, where the company controls both consumer card issuance and merchant acceptance. Given how much clout the card brand wields in industries such as restaurants, tourism, and luxury retail goods, it’s not surprising that Amex processing is more expensive overall than other card brands.

Unfortunately, there’s no one clear, transparent rate for Amex transactions. There isn’t even standardized pricing by industry. Your monthly processing volume, the ticket size, and whether the transaction is card-present or card-not-present all play a role.

The OptBlue program makes it easier for merchants to start accepting Amex without having to jump through additional hoops. However, it’s up to you to make sure that the rates you’re paying are competitive and that you’re getting solid customer support from your existing merchant account provider.

Once you hit a high enough processing volume, you’ll have no choice but to go through American Express directly for the account. You have a couple of plans to choose from, so you’ll want to compare the numbers and see which is ultimately the better value.

If you’re ready to add American Express acceptance to your card processing setup, we recommend checking out our favorite small business credit card processors, all of which offer the OptBlue plan.