Here is a typical question that a new business owner asks: Should I accept American Express?  Let’s briefly explore the issue.

It’s a dog eat dog business world out there today, especially with the present state of the economy. The last thing you want to do is lose sales because you don’t wish to pay a few extra dollars on your monthly bills. It could actually cost you big time in the long run.

A prime example of this is the American Express credit card. You may be debating over whether or not you should accept American Express because the credit card processing costs are higher – particularly compared with the rates assessed when you accept credit cards with Visa or MasterCard logos.

However, you should do a little research before making a decision. Keep in mind that American Express is used by a lot of business professionals, so if you’re dealing with these types of customers or selling business-related items it’s a good idea to accept the card, especially since American Express transactions are generally 30 to 50 per cent higher than others.  In other words, customers tend to spend more when using an American Express card.

But if you’re running a comic book store or something more in the lines of “blue collar” items or services, then you may not need to take American Express. But just remember, you may ultimately be losing a customer, and with all of the competition today, such a potential customer will certainly find somebody else who will take their form of payment.

If you’d like to take Amex cards, you will need to set up an American Express merchant account. To be considered for an account you must be a registered business and/or licensed in your state as a partnership, corporation or proprietorship. You will also need to have a good merchant credit rating. If you run a travel agency, you need to supply a valid ARC/IATA number.

American Express offers two main plans to merchants and you should make sure to take the one that best suits your needs and budget.

There is a discount-rate plan that assesses a percentage of every transaction. There are no monthly fees and annual fees with this option and you are encouraged to manage your account online.

There is also a flat monthly fee plan ($5.95 per month) which is aimed at small businesses that usually process less than $5,000 in American Express sales per year

If you’d like to take American Express, but don’t want any monthly fees, the discount rate plan could be the one for you, as you don’t have to pay anything unless you take an American Express card for a transaction. It’s always there just in case you need it and it won’t cost you anything if it isn’t being used.

However, before making your final decision as to whether to accept American Express, be aware that many online vendors don’t accept Amex because of the company’s perceived chargeback policy. When a chargeback occurs, many merchants believe the company often sides with the customer. A customer-friendly (merchant unfriendly) chargeback policy can often lead to fraud, as many consumers buy online products and charge them back. This means the merchant is basically out of luck and out of pocket on the transaction.  Still, many business owners assert that Amex chargebacks are winnable so there is definitely a perspective divide as it relates to Amex’s chargeback policy. 

Therefore, before getting an American Express merchant account, you should make sure you fully understand the company’s chargeback policy and have it in writing.

All factors considered, it still appears worthwhile to become an Amex merchant.  You can expand your customer base, take in more money for these transactions, and possibly be able to satisfy some of your business’s needs.  Indeed, accepting American Express cards can help you develop relationships with other businesses as the company has its own network of companies that may be able to help you simplify your supply chain, or get access to various types of professional services.

The pros seem to outweigh the cons so I am giving a lukewarm endorsement to accept American Express.