American Express, or Amex as it is generally known, is an iconic brand. Globally recognised, it has a hundred year trading history as a financial services provider. Principally known for its credit cards, charge cards and travellers cheques, spending on Amex cards is higher in volume terms than any other brand; in the United States it accounts for a quarter of all credit card transactions in terms of dollar volume.
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All you need to know about American Express
An American Express merchant account isn’t for everyone, as its rates are be significantly higher than Visa and MasterCard, though for merchants that wish to attract higher spending international customers the Amex brand has many advantages.
Amex customers are differentiated in several ways. Essentially they have a high disposable income and prefer to shop where they can use their Amex cards.
- Amex customers tend to be high spenders. In one survey it was found that they spent an average of 43% more than people who didn’t have an Amex card.
- They also tend to be loyal customers in that 46% are more likely to purchase from a new merchant if that merchant accepts Amex.
- The average income of Amex cardholders is higher than non-Amex cardholders; £43,320 compared to £31,840.
- 87% of Amex cardholders belong to the Amex loyalty programme.
Amex merchant accounts provide multicurrency processing for 170 countries and 127 different currencies. This means that customers can purchase in their own currencies giving them the advantages of convenience and the knowledge of exactly how much they are paying. Currency conversion costs are also low and there are a number of settlement options which provide merchants with flexible solutions to suit their business model.
Amex processing fees are notoriously a little higher than MasterCard and Visa, though as they are all negotiated on a customer by customer basis we can only provide examples for specific retailers. Typically MasterCard and Visa fees are from 1.5% to 2.9% while Amex charges 3.5% to 3.75%. Another retailer reports that its Amex rate is 2.89% while it pays 2.19% on Visa and MasterCard on online sales.
Amex offers an Internet Direct service which allows merchants to process card transactions directly with Amex with no extra fees.
American Express Payment Gateway
American Express also offers a payment gateway which is a secure ecommerce solution with advanced fraud management that works with all the usual shopping carts and many payment acquirers and processors. Pricing plans are customisable and transaction charges can be as low as £0.07 for high volumes.
The service delivers a single gateway to local and national customers and provides 24/7 multilingual customer support every day of the year.
Why Are Many UK Merchants Reluctant to Take American Express?
Many merchants in the UK don’t accept Amex cards, even giants such as B&Q, and the reason is simple. To quote an Amex spokesperson “'American Express provides a premium service to merchants, including online retailers, in the form of access to our attractive card member base, marketing expertise and analytic services. For that service we charge a premium over our competitors.”
An American Express merchant account can have significant benefits. As described, Amex card holders tend to have higher spending power and are loyal to retailers who accept Amex cards. There are millions of Amex cardholders globally which can be of huge benefit to merchants who sell internationally.
The downside of Amex is that the processing fees are higher than MasterCard or Visa, which discourages certain merchants; however it does appear that the reach of Amex is extending.
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