Minimum card spend and Amex acceptance

[Burgmeister]

This has been puzzling me.

Why do some retailers refuse to accept Amex?

Why do some retailers apply a minimum transaction value for all card payments?

I assumed this was down to the fees the card providers charged the retailer, I think called an interchange fee, but I read today that this is about 0.2% of the transaction value which surely is too low for any small retailer to care about...or is it?

Or is it related to something else entirely?

[MacW]

Some retailers refuse to accept Amex because historically they've been extraordinarily slow payers. Businesses could wait months before getting the funds. I assume they've got no better over the years.

Not sure on charges though.

[Ziplobb]

I can answer this for you. The last time I had an Amex rep in here they quoted me a fee of 7% on transactions so I could take their card. Ideclined to do business with them.

I run a gunshop - we sell shotgun cartridges - these have a margin of 10%

I buy 1000 of them for £140

I add 10% for myself £14

I add 20% vat to £154

The customer pays £184.80 (actually £185 for ease)

Amex take £12.95 (7%) to process the transaction - my profit comes down to £1.05 for a £185 sale

If you were me why would you want to take Amex cards from your customers ? I have not met a customer yet that does not have a debit card, mastercard, visa or even good old reddies - all of which cost me significantly less to process the payment - typically between 1.5 and 2%

[romeogolf]

There is a misconception about the rates they charge retailers and how long it can take to receive the funds.

In my experience, the charges are 2% or less and the money comes through within 3 days of the transaction.

[Jag_NE]

Ziplobb said:

I can answer this for you. The last time I had an Amex rep in here they quoted me a fee of 7% on transactions so I could take their card. Ideclined to do business with them.

I run a gunshop - we sell shotgun cartridges - these have a margin of 10%

I buy 1000 of them for £140

I add 10% for myself £14

I add 20% vat to £154

The customer pays £184.80 (actually £185 for ease)

Amex take £12.95 (7%) to process the transaction - my profit comes down to £1.05 for a £185 sale

If you were me why would you want to take Amex cards from your customers ? I have not met a customer yet that does not have a debit card, mastercard, visa or even good old reddies - all of which cost me significantly less to process the payment - typically between 1.5 and 2%

I can only assume that people want to earn cashback on their amex purchases.

[Mashwort]

Burgmeister said:

This has been puzzling me.

Why do some retailers refuse to accept Amex?

Why do some retailers apply a minimum transaction value for all card payments?

I assumed this was down to the fees the card providers charged the retailer, I think called an interchange fee, but I read today that this is about 0.2% of the transaction value which surely is too low for any small retailer to care about...or is it?

Or is it related to something else entirely?

so on the refusal to accept Amex, as stated its a cost / funds timing matter - Amex costs materially more for a merchant to accept than Visa / MasterCard (normally around double, the 7% for the gun guy is the highest I have come across) and can take several days more to be deposited into the merchants bank compared with Visa / MasterCard

In terms of the minimum transaction value, this is mostly a historical issue whereby the merchant was charged a fixed fee for each transaction (where a debit card was used), say 50p, and thus if the transaction value was low (say £5), even with a high profit margin on the item sold, the 50p the merchant had to pay their acquirer would materially dent the profit on the transaction. However since regulation came into force in this area, fundamentally all transactions should be charged to the retailer on a % terms and thus low value transactions are now much cheaper, so the minimum transaction value doesn't make economic sense (instead of being charged 50p, they are charged say around 1.5%, so the cost of accepting a card on a £5 transaction has dropped from 50p to 7.5p).

I have tried to explain this to several merchants with said min transaction spend signs but my wife usually drags me out of said merchant whilst I am explaining the economics of the transaction (I need to get a life...)

[Burgmeister]

Ziplobb said:

interesting stuff

Christ Amex must be raking it in. If it is 7% why would any retailer/ hotel etc want to accept payment in this manner? Unless they charge a lower % based on the revenue a retailer genterates for them, which I suppose is possible.

[Saleen836]

Interesting..
https://www.ft.com/content/715d785e-23fc-11e8-ae48...

[feef]

We use iZettle for in-store payments and Stripe and Paypal online. Stripe takes 1.4% for EU issued cards regardless of the badge (2.9% for non EU cards). iZettle is around the same, so I'm at a loss as to why it's still such a big deal.

[The Leaper]

There's an article on today's BBC News website reporting that supermarkets have won their court case challenging fees charged to them by credit card companies. It states "Interchange fees on credit card payments are now capped at 0.3% of any transaction, with debit card fees capped at 0.2%."

R.

[Tyre Smoke]

The Leaper said:

There's an article on today's BBC News website reporting that supermarkets have won their court case challenging fees charged to them by credit card companies. It states "Interchange fees on credit card payments are now capped at 0.3% of any transaction, with debit card fees capped at 0.2%."

R.

That is not across the board.

And these fees aren't the end of it. WorldPay charge for a virtual terminal on your PC or £20+ for a card machine.