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American Express

American Express is different from Visa and Mastercard. Amex is a "closed-loop" network - they issue cards, operate the network, AND handle acquiring (sometimes). This gives them more control but also makes them harder to work with as a merchant.

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What Makes Amex Different​

Closed-Loop vs Open-Loop​

Visa/Mastercard (Open-Loop):

Issuer ↔ Network ↔ Acquirer ↔ Merchant
(Separate companies at each step)

American Express (Closed-Loop):

Issuer + Network + Acquirer = Amex
(Same company controls multiple steps)

What this means:

  • Amex issues most Amex-branded cards themselves
  • Amex sets the rules AND enforces them directly
  • Amex sometimes IS your acquirer (OptBlue program)
  • Amex has more control over the entire transaction

OptBlue Program​

Amex created "OptBlue" to let third-party processors handle Amex:

  • Your Stripe/Square account can accept Amex
  • You don't contract with Amex directly
  • Amex still sets the rules

Pre-OptBlue: Merchants had to contract with Amex separately (painful) Post-OptBlue: Most SMBs accept Amex through their existing processor (easy)

If you're on Stripe or Square, you're likely using OptBlue without knowing it.

Amex Rules That Matter to Merchants​

1. No Formal Chargeback Monitoring Program​

Unlike Visa (VAMP) and Mastercard (ECM), Amex doesn't publish specific chargeback ratio thresholds.

But:

  • Amex monitors ratios internally
  • Over 1-1.5% = warnings
  • Over 2%+ = termination discussions
  • They don't publish the numbers

Less transparent than Visa/Mastercard, but generally more lenient.

2. Inquiry Process Before Chargebacks​

Amex uses an inquiry process:

StepWhat HappensTimeframe
InquiryAmex asks for transaction info20 days to respond
ResolutionIf satisfied, no chargeback filedN/A
ChargebackIf not satisfied, formal dispute20 days to respond

Key insight: Responding well to inquiries prevents many chargebacks. Amex inquiries are common (Visa/Mastercard rarely do this).

3. Shorter Response Windows​

Amex gives less time to respond:

  • Inquiry response: 20 days
  • Chargeback response: 20 days
  • vs Visa (30 days) and Mastercard (45 days)

Set calendar reminders - Amex deadlines sneak up faster.

4. Reason Code Format​

Amex uses letter-number format:

CodeCategoryExample
F29Fraud - card not presentMost common fraud code
C08Goods/services not receivedNot received disputes
C28Cancelled recurringSubscription cancellations
C32Goods/services not as describedQuality disputes

Fewer codes than Visa/Mastercard but same dispute types.

Full breakdown: Amex Reason Codes

Amex Network Fees​

Amex fees are higher than Visa/Mastercard:

Fee TypeTypical RateNotes
Discount rate2.5-3.5%Higher than Visa/MC interchange
Per-transactionVariesBuilt into discount rate
No interchangeN/AAmex keeps the whole discount

Why higher: Amex issues premium rewards cards. They fund those rewards from merchant fees.

OptBlue pricing (through Stripe/Square):

  • Similar to Visa/Mastercard (2.9% + $0.30)
  • Amex subsidizes to match competitors
  • At high volumes, may be higher

Amex Dispute Process​

Stage 1: Inquiry​

Trigger: Cardholder questions charge

What Amex asks for:

  • Transaction details
  • Product/service description
  • Delivery confirmation (if applicable)
  • Customer communication

Response window: 20 days

If you respond well: ~40-60% of inquiries don't escalate to chargebacks

Stage 2: Chargeback​

If inquiry doesn't resolve:

  • Formal chargeback filed
  • You receive notification
  • 20 days to submit representment
  • Amex reviews and decides

Response window: 20 days (strict)

Stage 3: Amex Reviews​

Unlike Visa/Mastercard: Amex IS the issuer in most cases. They're reviewing their own cardholder's claim.

This creates bias - Amex tends to side with cardholders (they're protecting their own customers).

Win rates:

  • Amex: 30-40% typical
  • Visa/Mastercard: 40-50% typical
  • Amex is harder to win

No Pre-Arbitration​

Amex doesn't have a pre-arbitration stage:

  • Representment → Decision
  • No second chance to argue

Mastercard/Visa: Representment → Pre-arb → Arbitration (multiple chances) Amex: Representment → Decision (one chance)

When Amex Intervenes​

1. Ratio Too High​

Amex doesn't publish thresholds but:

  • Over 1%: Monitoring starts
  • Over 1.5%: Warnings sent
  • Over 2%: Termination discussions

Less strict than Visa but still enforced.

2. Fraud Patterns​

Amex monitors for:

  • Multiple fraud complaints
  • Cardholder disputes of premium card benefits
  • Merchant category violations

Amex protects their premium cardholders aggressively.

3. OptBlue Violations​

If you're on OptBlue (through Stripe/Square):

  • Amex can kick you off OptBlue
  • Your processor may still work, but no Amex cards
  • Violations: fraud, chargebacks, MCC issues

Why Merchants Accept Amex​

Despite higher fees and harder disputes, merchants accept Amex because:

1. Premium customers

  • Amex cardholders have higher average incomes
  • Higher AOV (average order value)
  • Lower fraud rates (Amex screens applicants heavily)

2. B2B dominance

  • Amex is huge in business spending
  • Corporate cards are often Amex
  • If you sell B2B, Amex is unavoidable

3. Customer expectation

  • Not accepting Amex looks unprofessional
  • Premium brands expect Amex acceptance

4. OptBlue made it easy

  • Pre-OptBlue: Separate Amex contract (painful)
  • Post-OptBlue: Amex works through your existing processor

When to Skip Amex​

Consider not accepting Amex if:

  • Your margins are thin (under 20%) and every 0.5% matters
  • You're primarily low-ticket transactions (under $20)
  • OptBlue pricing is significantly higher than Visa/MC
  • You're a pure consumer brand (not B2B)

Calculate:

  • What % of your transactions are Amex? (Typically 5-15%)
  • Are Amex customers higher AOV? (Typically yes, 20-40% higher)
  • Does revenue from Amex exceed extra fees?

Most merchants keep Amex because the 5-15% of transactions are worth it.

Test to Run​

Amex ROI audit (if you're already accepting Amex):

Week 1: Transaction analysis

  1. Pull last 3 months of transactions
  2. Calculate Amex %: Amex transactions / Total = ____%
  3. Calculate Amex revenue %: Amex sales / Total sales = ____%

Week 2: Profitability check 4. Calculate Amex fees paid 5. Calculate what you would have paid at Visa/MC rates 6. Extra cost: $_____ /month

Week 3: Value assessment 7. Calculate Amex average order value vs overall AOV 8. Amex AOV premium: ____% 9. Decision: Does Amex revenue justify extra fees?

Success criteria: If Amex represents 10%+ of revenue or has 20%+ higher AOV, it's worth accepting despite higher fees.

Scale Callouts​

Under $100K/month:

  • Amex is 5-10% of transactions typically
  • Extra fees: $50-$150/month
  • Worth accepting (professionalcredibility)

$100K-$1M/month:

  • Amex share may be 10-15%
  • Extra fees: $200-$800/month
  • Still worth it unless pure consumer brand

Over $1M/month:

  • If B2B, Amex is unavoidable
  • If consumer, audit if revenue justifies cost
  • Consider negotiating Amex rates

Over $10M/month:

  • Amex will negotiate custom pricing
  • Likely getting sub-3% rates through OptBlue
  • Definitely keep Amex at this scale

Where This Breaks​

  1. Closed-loop means Amex bias: Amex reviews their own cardholder disputes. They protect their customers. Win rates are lower.

  2. Premium cardholders are demanding: Amex customers have high expectations. "Not as described" disputes are common.

  3. No network-level escalation: Unlike Visa/MC arbitration, Amex IS the network. Their decision is final.

  4. Inquiry responses take time: Responding to inquiries properly requires same effort as chargeback responses. Budget for this.

  5. OptBlue vs Direct varies by processor: Some processors charge more for Amex. Check your statements.

Next Steps​

Understanding Amex better?

  1. Amex Reason Codes - All Amex dispute codes
  2. Compelling Evidence - Evidence for Amex
  3. Representment - Amex-specific process

Optimizing Amex acceptance?

  1. Respond to inquiries within 48 hours (20-day window but faster is better)
  2. Collect same evidence as Visa/MC (3DS, tracking, etc.)
  3. Monitor Amex ratio separately

Comparing networks?

  1. Visa - Open-loop, stricter monitoring
  2. Mastercard - Open-loop, higher thresholds
  3. Discover - Smaller US network
  4. Card Networks Overview - All four compared

See Also​