Can you imagine owning a business and seeing those Visa ads telling everyone that you ONLY accept Visa? Wouldn’t you start accepting American Express? Or is this some sort of exclusive deal with Visa?
As I understand it, American Express charges small businesses far more as a percentage of their gross. There’s no especial need for a small business to have to do all the paperwork involved in setting up a redudant account that will cost them more money. Most businesses will just forgo the “honor”.
Yes, American Express is a lot more expensive. In fact, the restaurant owners of Boston once threatened a boycott of Amex over this very issue. (Boston Fee Party)
You can accept VISA, MC and some other cards under one validation system. I believe AMEX has their own validation system, just another added complication.
Amex charges the vendor about 6%, VISA & MC about 3%. That can mean a big difference to the vendors. As for the places in the commercials, it’s probably also part of an exclusive agreement in return for advertising.
While I don’t remember the exact percentage for Amex off the top of my head, the general rule of thumb is that the fee to the retailer for using a credit card is 2% of the amount of purchase–at least for Visa and MasterCard. A specialty card, such as a gas station card or department store card, is likely to have no fee for the retailer–ChevronTexaco does this at least for the Chevron brand. If I also remember correctly, the cards that give a rebate do it by charging the retailer higher fees. For example, Discover, which does give rebates, charges a fee of something like 3 or 4%. However, it’s been a while since I looked at CC batch information, which would list all the fees for the various types of credit cards.
Don’t know all the details, but there have also been allegations that Visa/Mastercard puts pressure on retailers not to take other cards. This has been the subject of protracted litigation.
I’ve always wondered, since the credit card company are taking a bite out of the vendor’s profits, is it worth it to even accept credit cards if you run a small business? Up until recently I never realized how much it cost the vendor just to accept credit cards. My credit card has no annual fee, and I pay off the balances in full each month, so paying by credit card doesn’t cost me any extra, but apparently it costs the vender more 
Also, why do places charge you a fee for paying with debit but not credit? If the fee is to cover their own cost, you’d figure they’d charge it for either payment method…
Some of you may be familiar with WinCo Foods. I know they’re on the West coast. They only accept cash and checks. Not credit cards, or even debit cards. They also have very low prices. And they’re not even a small business. If a company is willing to pass the savings on, not accepting credit cards can be beneficial all around. A little less convenient, but worth the price, so to speak.
The vendor balances out how much it costs him or her to accept plastic, against how much business they’s lose if they don’t. A pretty straightforward calculation.
Incubus, I would think it at least partially depends on what business you’re in. If you’re a gas station or grocery store or computer maker or something else that people use credit for either convience or large purchases, you don’t have much of a choice. Both independent franchised gas stations I’ve worked at take just about every type of card out there, including a couple of different fleet cards and even Diner’s Club (though I’ve never see anyone use Diner’s Club.) As for why they are charging you with a fee to use debit, that seems odd. In my experience, most debit card transactions are a smaller fee, generally just a few cents, no matter what the total amount of purchase.
SpaceForRent, I know what you’re talking about. Costco does about the same thing, although they will take debit cards and I believe Amex.
Yep, you’re right. They take debit cards, probably because of the low fees. They also take Amex, but I think it’s because the same company owns both Costco and Amex, but don’t quote me on that. I do know they have some pretty close business ties at the very least. So Amex fees probably aren’t a major issue with them.
I read an article about this in the WSJ a while ago. Basically, Visa pays hip/trendy places not to accept Amex. But only for a certain amount of time–usually just a few weeks. Then they go right back to accepting Amex, with a fat fee from Visa in their pockets. The vast majority of commercials you see for Visa are inaccurate–they should say “But they didn’t take American Express when we filmed this add.”
Sorry, no cite, but I distinctly recall reading the article.
And they did take AE before they were paid off not to take it. The commercials are misleading.
I use an American Express card, and fortunately, I am able to pay it in full at the end of each month. I make it a habit to write down the names of the places I have attempted to use the card, and been refused. This, I put right on my bill. Strictly for ball breaking reasons. 
AE doesn’t get to make money off the interest on your roll-over charges (with their standard card), so they make all their money off the vendor. Some vendors opt out, figuring they won’t really lose much business.
What about goofy credit cards like Carte Blanche and JCB? I see a lot of places that accept JCB, although I’ve never seen a JCB card. I see the rare restaurant or hotel that accepts DC and CB, but like JCB I’ve never seen their cards.
JCB is a Japanese credit card (the credit laws are apparently considerably different there; Sublight was telling me some details, but rather than me relating them, perhaps he’ll stop by and explain). In any event, JCB is far more popular in Japan.
With regard to the percentages taken by credit card companies, it varies by industry and retailer-type. For low charge-back, card-present transactions, the percentage is usually quite low. For higher risk industries, the rate is correspondingly higher.
With regard to the difference between American Express and VISA, it is true that AMEX charges a higher percentage. For merchants, it basically boils down to whether or not the more desirable consumer profile of an American Express card holder outweighs the higher cost of accepting the card.
Most card processors these days can handle American Express (and other, rarer cards) through exactly the same mechanism as Visa and Mastercard. Certainly, all of the major processors I’ve dealt with had no problems.
Maybe for Discover, but I have a Visa card that gives rebates, and I don’t know how they would charge more for that particular type of card.
I believe that the Cards agreement with the store forbids them from charging a fee to the customer for using the card. I’m not sure if a discount for cash is legal. Since debit cards have no such agreement, they can get away with charging extra.
I remember when Diners Club was the leading and one of the only cards (long before I got a card.) Every so often you see an article about them, but I too have never seen one used, and would wonder why anyone would have one - unless the person is 80 and uses it out of habit.
SpaceForRent:
It’s not that the same company owns both, it’s an exclusivity agreement. Used to be Discover was the only card accepted at Costco.