Question

What is the main reason why some businesses do not accept american express credit cards?

a. american express has higher finance charges for its card holders than other credit cards.
b. american express charges a very high annual fee to its cardholders and customers often complain about this.
c. american express takes a higher percentage of the transaction from merchants than do other bank cards.
d. they don't like the american express company so they boycott by not accepting their credit card.

Answer 1

Businesses often choose not to accept American Express credit cards due to the higher transaction fees that American Express charges merchants compared to other bank cards. This increased cost can reduce a business's profits, leading them to prefer cards with lower merchant fees.

Step-by-step explanation:

Why Some Businesses Do Not Accept American Express

The main reason why some businesses choose not to accept American Express credit cards is due to the higher transaction fees imposed on merchants. Unlike other credit card companies, American Express often charges a higher percentage per transaction, which can significantly cut into the profits of businesses. This is different from finance charges or annual fees that are charged to cardholders. Because of these costs, some businesses find it more economical to accept other bank cards that charge lower merchant fees.

The credit card market is substantial, with millions of Americans carrying balances and paying interest and other fees. In 2021, there were almost 200 million American credit card holders and around $807 billion in outstanding credit card debt. A typical credit card interest rate ranges from 12% to 18% per year. With such a large percentage of families carrying a balance and incurring interest, credit card issuers earn significant revenue from interest charges. However, when it comes to merchant costs, American Express is often at the higher end compared to its competitors.