Consumers often notice American Express isn’t accepted at every merchant. On the other hand, Visa and Mastercard are almost universal. Amex charges merchants higher transaction processing fees, which helps explain this disparity. Rewards cardholders benefit from this situation because higher transaction fees mean better reward options. In the coming months, though, everything could changes for Amex cardholders. American Express announced its plan to reduce transaction fees for merchants in the coming months.
In theory, lower fees for merchants would bring more merchants to accept American Express. Thousands upon thousands of new merchants would offset the lower transaction fees, which would mean nothing changes for rewards cardholders. Things could even become better for cardholders if the merchant numbers climb high enough. At this point, Amex is behind Visa and Mastercard by over 1 million merchants, which is no small number.
However, nothing is guaranteed with this fee change. Amex will likely add quite a few new merchants to accept its cards. It remains to be seen whether that figure will be high enough to offset the lost fee revenue. If the change doesn’t play out as intended, then Amex may be forced to reduce its rewards programs in significant ways. From there, cardholders will only suffer.
American Express will implement the fee changes in the near future. In due time, more and more merchants will accept the company’s credit card transactions. Cardholders will find out soon after whether the move is panning out well. They’ll either continue to see the company’s same strong rewards programs, or they’ll see a noticeable reduction.