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Accepting AMEX at a small business

xryanx 59 23 April 23, 2016 at 07:53 AM
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What are everyone's thoughts about a small business accepting/not accepting AMEX? I assume very few people have AMEX exclusively, and even fewer would have that as a company card. The company I work for is an HVAC wholesaler, manufacturer, and specialized contracor. Our COO flipped out yesterday as a customer payed a $62,000 invoice for a project completed under our contractor division with an AMEX. These projects are priced with the expectation of cash payments (this division almost never takes credit cards). We are debating dropping AMEX all together as we do almost zero business with the general public and the AMEX fees are almost double.

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#2
what happens if they paid $62k with visa?

i know some places charge extra 2-3% if cc is used.
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#3
Quote from xryanx View Post :
What are everyone's thoughts about a small business accepting/not accepting AMEX? I assume very few people have AMEX exclusively, and even fewer would have that as a company card. The company I work for is an HVAC wholesaler, manufacturer, and specialized contracor. Our COO flipped out yesterday as a customer payed a $62,000 invoice for a project completed under our contractor division with an AMEX. These projects are priced with the expectation of cash payments (this division almost never takes credit cards). We are debating dropping AMEX all together as we do almost zero business with the general public and the AMEX fees are almost double.
Lots of businesses use Amex for their business cards. I don't know if I'd categorize Amex merchant fees as double, that's a stretch or your merchant account is not properly vetted.

Either way, if you are a cash business you typically have two prices, one for cash and one with a credit card processing fee.

It's important to note a couple of things here (as some business managers strictly look at the fee % and freak out).

1) You might not be able to make the sale if you refuse credit cards. Some places insist on using them for purchases for a lot of GOOD reasons. So whining about it is poor business management. You either adjust to accept them or not (not accepting credit cards is usually a poor decision but not always).

2) A lot of places just build in a flat 3% or so into their products to accommodate for all payment gateways. Cash customers usually get a discount. There are a few alternatives tweaks to this method and each business should adjust accordingly to their customer base.

Either way, it sounds like your company didn't have an appropriate payment policy in place and should adjust accordingly.
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#4
Quote from eekthecat View Post :
Lots of businesses use Amex for their business cards. I don't know if I'd categorize Amex merchant fees as double, that's a stretch or your merchant account is not properly vetted.

Either way, if you are a cash business you typically have two prices, one for cash and one with a credit card processing fee.

It's important to note a couple of things here (as some business managers strictly look at the fee % and freak out).

1) You might not be able to make the sale if you refuse credit cards. Some places insist on using them for purchases for a lot of GOOD reasons. So whining about it is poor business management. You either adjust to accept them or not (not accepting credit cards is usually a poor decision but not always).

2) A lot of places just build in a flat 3% or so into their products to accommodate for all payment gateways. Cash customers usually get a discount. There are a few alternatives tweaks to this method and each business should adjust accordingly to their customer base.

Either way, it sounds like your company didn't have an appropriate payment policy in place and should adjust accordingly.
I was told that the fees we were paying for AMEX were almost double. I havn't seen the number myself, but that was brought up in the meeting. Building in an extra couple percent for selling product is fine. Adding it to a bid for a contracting project will cost us big time in terms of closure. Most project go low bid, so if we start padding it because someone may want to use a card to pay, we will lose projects. We aren't saying that we won't take credit cards at all, but we are looking to minimize the fees we are facing.

What kind of credit limits do typical business cards have? Is something like 50k typical? Most of our invoices for contract jobs are over 50k, so credit cards aren't an option.
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#5
Amex is Amex. You either agree to pay whatever fee they charge or do not accept it. Frankly, there are plenty of businesses that do not accept Amex even still so if it is a problem the simplest solution is to just not accept it anymore imo.

That said, many businesses with large ticket items simply limit the amount that can be charged on a credit card or outright refuse to accept credit cards. For ex, auto dealers will almost never allow you to pay by CC for much beyond the initial deposit. You could simply put up a policy saying no credit cards accepted for amounts above X.
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#6
Quote from xryanx View Post :
I was told that the fees we were paying for AMEX were almost double. I havn't seen the number myself, but that was brought up in the meeting. Building in an extra couple percent for selling product is fine. Adding it to a bid for a contracting project will cost us big time in terms of closure. Most project go low bid, so if we start padding it because someone may want to use a card to pay, we will lose projects. We aren't saying that we won't take credit cards at all, but we are looking to minimize the fees we are facing.

What kind of credit limits do typical business cards have? Is something like 50k typical? Most of our invoices for contract jobs are over 50k, so credit cards aren't an option.
You don't add the cost to the bid. You state CC fees in the Terms of payment.

When I worked for a builder, having 6 houses close each month was the norm. 50k limit was nothing and that was at homedepot
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#7
Quote from xryanx View Post :
I was told that the fees we were paying for AMEX were almost double. I havn't seen the number myself, but that was brought up in the meeting. Building in an extra couple percent for selling product is fine. Adding it to a bid for a contracting project will cost us big time in terms of closure. Most project go low bid, so if we start padding it because someone may want to use a card to pay, we will lose projects. We aren't saying that we won't take credit cards at all, but we are looking to minimize the fees we are facing.

What kind of credit limits do typical business cards have? Is something like 50k typical? Most of our invoices for contract jobs are over 50k, so credit cards aren't an option.
It's just stated as fees but built-in to the project as an option instead of cash. Businesses don't tend to mind as long as they have an option. Reward points don't drive a business so they shouldn't throw a fit by paying cash.

As far as the credit limits, it varies but a lot of businesses have pretty good sized limits. In our case we give our employees usually $5k of usually monthly spending but more if they have a specific project that can use their card. We can certainly go up to just about any amount we need.

You will probably run into few that use a credit card because it is such a large limit, but your business should be prepared to have a payment policy that either accepts them or not and how to do so.

My guess is this company asked if you would take cc, someone said yes, and apparently without fees, so any company would jump at that pretty fast. I know I would.
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#8
Quote from eekthecat View Post :
My guess is this company asked if you would take cc, someone said yes, and apparently without fees, so any company would jump at that pretty fast. I know I would.
That is exactly what happen. We didn't have a policy against it, which is managements fault. Historically, we've had issues with some customers taking months or in some cases, years to get their accounts current, so credit card use was a plus as we didn't have bad debts to write off or have to chase the people down, but those were wholesale customers who were buying product. This particular issue was the owner of the business who payed us playing the points game, and I don't blame them, except that they are one of our best customers and we have a great relationship. They knew we would get hammered with fees. Lesson learned on managements part.
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#9
Shop for the best fees. We just switched to Payline Data, and our Visa/MC/Discover rate is 2% + $.10 per transaction, and our AMEX price is between about 2.7% and 2.9% +$.10 per transaction depending on dollar amount of the sale. We don't love taking AMEX but we are small enough that saying no for a sale is never a good thing, although a majority of business with AMEX have another card because they know it won't be accepted everywhere.

We take AMEX and we will do about a million in sales this year.
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#10
Amex or not your invoices should state that the price is a "Cash Price" and credit options are available for an extra fee or something like that. I think that if your company explained to the customer what happened and that it was a mistake b/c the fees were XXXXX you guys could work something out.

Personally I don't see amex as available in a lot of places so I don't have one. Visa and Discover seem to be the 2 largest by far.
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