During my time in merchant services, I have routinely run across merchants that have opted to not accept the American Express card from their customers, due mainly to a couple of complaints:
- Higher cost of accepting the card compared to Visa, MasterCard and Discover.
- The fact that they had to apply for the card through American Express separately, which required a separate statement along with a host of rules/requirements that were confusing to most merchants.
- American Express chargeback policies that weren’t always in the best interests of the merchant.
Because American Express generally targets higher income and better-credit customers than other issuers, fewer Americans actually carry American Express cards compared to Visa and MasterCard. Merchants opting to not accept these cards might think that the decision does not have a major impact on their bottom line — but American Express is the largest in the world when it comes to number of transactions.
So in an effort to get more merchants to accept their cards, American Express created the OptBlue program in 2014, which is designed to address many of the issues mentioned above that merchants had with accepting American Express cards. (American Express also updated some policies in 2016 to be even more merchant-friendly.)
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Advantages of the OptBlue Program
The OptBlue program includes five updates that make it much more attractive to merchants to accept American Express cards.
- Merchants can now automatically sign up for American Express when they sign up for a merchant account.
- Merchant processors now set the rates for American Express cards.
- Merchants can now receive settlements at the same speed as they would with other bankcards.
- Merchants can now receive American Express transactions on the same statement as those of other bankcards.
- Merchants can now benefit from a better chargeback dispute policy.
Note that not every merchant credit card processor is signed up to accept American Express OptBlue. So when seeking a merchant processing account, you want to inquire with your merchant processing agent on if they are signed up with the OptBlue program or not.
1. Automatic Signup for OptBlue
When you apply for a merchant account with a merchant processing company you are automatically signed up to accept Visa, MasterCard and Discover. Before the OptBlue program, there was a separate application process that was required during the underwriting of the merchant account to accept American Express cards. Now you are automatically signed up to accept all four major bankcards (if offered by the merchant processor). Time is money for most small business owners (especially when it comes to setting up business services or shopping for financing), so shortening the onboarding process and making it more efficient is a nice upgrade.
2. Processing Rates for Credit Cards
Credit card providers will give merchant processing companies a set of base rates, or rates that the credit card providers will charge the merchant processor for each transaction. The merchant processing company passes that fee along to the merchant along with an added rate that is the merchant processor’s cut.
Thus, when a merchant processor signs up for OptBlue, American Express provides them with their own, uniquely negotiated, set of “base rates” of the various types of American Express transactions that could be run at the point of sale. This is similar to the interchange base rates that are provided from Visa and MasterCard.
Before the OptBlue program, American Express would set universal rates, with no room for negotiation on behalf of the merchant. In addition, many times said rates were based on things beyond the merchant’s control, such as how much volume they were processing or what type of industry they operated in.
3. Handling Settlements As Quickly As Other Bankcards
Some merchant processors are setup on 12- to 24-hour settlement of credit card processing deposits for their merchant base. This allows for better cash flow due to fast access to money from the processing activity. With OptBlue, American Express deposits can be accessed in the same frequency that you could access funds from your Visa, MasterCard and Discover transactions. That’s a big boon to merchants who are just starting out and rely on regular cash flow to keep up with startup costs or may need to leverage that income to qualify for some business financing options like a cash flow loan or merchant cash advances.
4. A Unified Transactions Statement
Before the OptBlue program, all American Express transactions were included on a separate statement that came from American Express each month, whereas the transactions from Visa, MasterCard and Discover all came on another statement provided by the merchant processor. Now, all four bankcards will be included on one statement, which creates a more efficient reporting and accounting management process for small businesses.
5. Better Chargeback Dispute Policy
Resolving American Express chargeback disputes used to be a very daunting task, but the OptBlue program has brought forth a more efficient process allowing for better dispute management and lower chargeback cases. Via the OptBlue program, merchants can expect fewer chargebacks 120 days after the transaction. Customers can now only dispute a transaction up to two times, and there will be no more “missing signatures” chargebacks.
If you don’t currently include American Express in your line of accepted credit cards, it might be time to rethink that decision and make sure you’re winning the business of American Express cardholders.