American Express charges merchants more than other card companies to accept AmEx, making Visa a more accessible option for many merchants.

Why American Express charges merchants more than other card companies to accept AmEx

Each card network charges merchants a discount rate, which is a fee merchants pay to accept cards. American Express charges higher discount fees than competitors like Visa and Mastercard as the business is more reliant on fees for operation.

American Express runs on a 'spend-centric' model, using perks and merchant fees to drive profit

American Express cardholders tend to spend more money per transaction than other credit card users, which makes the interchange fees merchants have to pay to accept American Express cards worth it while incentivizing other companies to pay the interchange fee as well.

Merchants have to pay credit card transaction fees each time a card is swiped

Credit card networks such as Visa, Mastercard, and American Express must calculate fees for not only the customer, but also the merchant in every transaction.

American Express is both a card issuer and a processing network

Unlike most credit card companies, American Express issues credit cards and processes payments—something called a closed-loop model. By offering both services, American Express profits from both interest and interchange fees, and also has access to more data on how customers spend their money so it can offer better perks.

American Express caters its business to wealthy cardholders

American Express cards charge high annual fees, but also offer significant rewards and credits. It's just one way the company targets affluent customers who spend higher dollar amounts per transaction and tend to have more transactions than the average cardholder. This strategy decreases the company's risk, since it actually offers credit instead of just acting as a card network.

Visa, the first credit card network, still dominates competitors with a roughly 52% market share by purchase volume.

Among the major credit card companies in the US, Mastercard had about 25% of the market share in 2025. American Express had roughly 20%, and Discover had the smallest market share of about 4%.

Credit card companies make money through interest, annual fees, and more

They also profit from interchange fees, the fee the retailer has to pay the credit card network in order to facilitate a transaction. The fee is typically between 1% and 3% of the transaction amount.

American Express uses co-branded cards to provide brand-specific perks

Co-branded credit cards are partnerships between a card issuer and another company. Unlike regular credit cards that offer many different kinds of benefits at different companies, co-branded cards tend to only offer perks with the partner company. For example, American Express has a co-branded card with Delta airlines that allows users to earn points specifically towards the Delta rewards program.

In 2025, American Express paid $230M to settle fraud and deceptive marketing charges

American Express launched a wire payment service targeted at small businesses and falsely touted the service as a tax-deductible business expense in 2018. American Express was also accused of allowing small businesses to open corporate credit cards without the necessary employer identification number (EIN).

American Express has acquired restaurant software companies to elevate its cardholder experience

One of the many perks of American Express cards is dining credits and special reservation access to fine dining restaurants. Since American Express cardholders are often more affluent than other credit card users, restaurants have benefited from increased partnerships with American Express to offer cardholders preferential reservations and premium experiences. In 2019, American Express acquired Resy, a reservation software, and went on to acquire Tock in 2024.

In 2018, the Supreme Court sided with American Express in a case that significantly changed antitrust regulation.

The US Department of Justice sued Visa, Mastercard, and American Express in 2010 over alleged anticompetitive contracts with merchants. While Visa and Mastercard settled out of court, American Express went to trial and had its case taken all the way up to the Supreme Court—which ruled that both sides of a transaction business must be analyzed to determine a monopoly.

American Express debuted its first charge card in 1958 to give travelers access to cash abroad

The original American Express charge card was made of purple paperboard and allowed customers to book travel. Unlike credit cards, the card's balance had to be entirely paid off each month. When the card first launched, 250,000 customers used it, and 17,500 companies had agreed to accept it.

Card issuers are financial institutions that open credit to customers, while card networks facilitate purchases between merchants and customers

Card issuers give customers credit cards, set rate limits, and collect payments. Card networks, on the other hand, dictate where credit cards can actually be used by managing relationships between the network and merchants. These networks make money on interchange fees, which merchants pay to accept a specific card network at their stores.

American Express is targeting Gen Z, who are generally less risk-averse than older generations

Unlike Millennials, who grew up during the Great Recession in 2008, Gen Z has a higher risk appetite and has grown up with more gamified spending platforms, like online gambling and prediction markets. Analysts say Gen Z's risk appetite makes them prime targets for credit card companies like American Express that can sell younger customers on large benefits in exchange for annual fees.

Roughly 39% of Visa's revenue comes from data processing fees.

Visa gets roughly 0.13% to 0.14% of each transaction. About 32% of its revenue stems from the money banks pay Visa to use its services, and roughly 26% of its revenue comes from international transaction fees.

Two of American Express' co-founders also founded Wells Fargo

Henry Wells and William Fargo formed Wells, Fargo & Co. two years after American Express was created. Wells and Fargo saw an opportunity to expand the express delivery service from the East Coast and Middle America to the West Coast. The two initially asked the American Express board to expand operations, but the board declined, so they decided to create their own company. Today, Wells Fargo is among the top four largest banks in the US.

The name Visa was conceived by the company's founder, Dee Hock.

Visa was previously called National BankAmericard Inc. (NBI), but as other banks began to license the network and it expanded internationally, it needed a name less associated with both Bank of America and America itself. Hock believed that the word "Visa" implied no national identification and was relatively easy to pronounce in any language.

Charge cards are different from credit cards

Unlike credit cards, charge cards often don’t have a preset credit limit, but cardholders need to pay off the entire balance every month.

BNPL companies typically make money via merchant fees rather than interest

When a merchant partners with a buy now, pay later app, consumers are more likely to spend more money with that merchant—meaning that the merchant is willing to pay a small fee in exchange for the ability for customers to pay with buy now, pay later.

US consumers collectively owe more than $1T to credit card companies—almost as much as they owe in auto loans.

Gas stations top the list of riskiest places to use a debit card

Unlike credit cards, debit cards withdraw funds directly from your checking account, and federal laws provide fewer consumer protections against debit fraud. Gas station "skimmers" and long periods of separation from the card at restaurants are some of the more vulnerable spots for use.

How FICO and VantageScore weigh factors in credit history differently

VantageScores are sometimes lower than FICO scores because the algorithms that calculate the two scores weigh the factors that influence them differently. For instance, VantageScores typically weigh payment history more heavily than FICO scores.

Payday loans typically have higher interest rates than cash advances

Cash advances and payday loans are both short-term loans that allow borrowers to access cash quickly. Payday loans are much shorter-term, often due in two weeks or by the borrower's next paycheck, and have much higher interest rates.

The Fed operates within the open market as a competitive bidder of interest rates

Because it’s viewed as a risk-free platform to earn interest, whatever rate it sets becomes the default benchmark. To maintain its target rate prescribed by the Federal Open Market Committee, the Fed has various tools it offers both commercial banks and home loan institutions.

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