American Express & Discover Merchant Accounts

When applying for a new merchant account you will most likely be asked if you would like to accept American Express and Discover. Choosing to accept both of these cards is often the best decision.

Most businesses will find it cost-effective to accept all four of the major credit cards.

• Visa
• MasterCard
• American Express
• Discover

Typically, the rates charged for Visa and MasterCard transactions are the same, and are dictated by the merchant service provider. However, the same is not true for American Express and Discover merchant services. Both American Express and Discover have sole control over the discount rates associated with their respective accounts.

The discount rate for both American Express and Discover is higher than that of Visa and MasterCard. Discover does not charge a monthly merchant account statement fee, where American Express will charge $5 a month whether you use their services or not until your processing volume is in excess of $5K a month.

The fact that Discover does not charge a monthly statement fee makes their package appealing to most merchants. You will only have to pay fees to Discover if you accept one of their credit cards.

Aside from the highest discount rate in the industry, the next downfall of American Express is the fact that they charge $5 a month whether you use their service or not (unless you have a high AMEX processing volume). Out of the "big four", American Express cards are not used as frequently, and more often than not any customer carrying an American Express card also has a Visa or MasterCard.

Once you get past the higher rates and fees associated with American Express and Discover, there are a few good reason why a new business should consider accepting both cards.

New business can't afford to lose customers.
Believe it or not there are still people in this world that ONLY have an American Express or Discover card. You'll be sorry if you have to turn away one of these customers because you are unable to accept their method of payment.

Letting the merchant provider set up each account is free (usually) and easy.
The merchant service provider that sets up your Visa and MasterCard merchant account, will often set up your American Express and Discover merchant accounts free of charge.

American Express and Discover do not charge a fee for a new merchant account.
Your merchant service provider should offer this service free of charge. If they have a fee for setting up an American Express and Discover account, you should inquire as to what the fee is for. If they are unwilling to waive the fee you should consider setting each account up yourself by simply calling each provider. Of course, after you acquire merchant account numbers from AMEX and Discover your existing provider will need to append these number to your merchant account program. Some providers will charge a fee for this service.

You can cancel the accounts when you're sure you won't lose business.
There are no contracts associated with an American Express or Discover merchant account. Therefore you have nothing to lose by trying them out for a while to see if there is a demand for the cards with your customers. If there is no demand you can cancel your American Express and Discover accounts knowing you will not lose business.

You don't HAVE to advertise that you accept each card.
If your main reason for not wanting to accept American Express and Discover is the higher rates; only accept the cards when a customer has no other method of payment. This may be more feasibly with Discover since their are no monthly fees, but it can be an affective solution for both card types.

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Depending on target market, industry, location, and a few other factors, some business will have a high demand for American Express and Discover cards. Any business with:

• a lot of tourist traffic
• corporate/business customers
• international customers

should definitely accept American Express and Discover.

Ultimately, the decision to accept American Express and Discover will fall to you as the business owner. Be as objective as possible, and use the information above to brainstorm the best solution for your business. If you're still unsure of which option is best for your business, you may want to follow the links below to the merchant sections at the American Express and Discover web sites. They have a merchant's guide that is full of useful information to help you make an educated decision.

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