American Express is known for charging higher merchant fees than the other credit card networks: Visa, Mastercard, and Discover. A number of businesses do not accept American Express because they do not want to cover these high transaction costs.
To alleviate some of this concern, AmEx may be giving select merchants a sign-on bonus to accept their cards.
According to The Wall Street Journal, bonuses range from $10,000 to $450,000. Over 100 small businesses have received AmEx sign-on bonuses since 2018, representing only a small fraction of businesses that currently accept AmEx cards. Since 2017, over three million new businesses have begun accepting American Express.
Last year, American Express won a Supreme Court ruling regarding their merchant agreement. The agreement does not allow businesses to encourage customers to use alternative payment methods, such as a Mastercard, Visa or cash. This would save the merchants money, but it would take business away from American Express.
In their ruling, the Supreme Court decided that AmEx’s business model has ultimately improved the credit card market. Credit card providers are pressured to create new rewards offers to entice and maintain customers. Consumers benefit from the enhanced offers that come from this.
American Express expects to catch up with rivals Visa and Mastercard by the end of the year. Amex cardholders reportedly spend over three times more per year than non-Amex cardholders.
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