The payment industry has undergone drastic changes in the past few years. Starting from traditional cash payments to card swiping norms, shoppers are now finding the new contactless and digital payment modes more exciting and convenient. With American Express contactless cards, users need a mobile device or a card to hover over the card reader or POS terminal to make a transaction.

Digital payments and, above all, contactless payments are changing the way buyers pay for their purchases at both brick-and-mortar stores and online shopping portals. To start accepting contactless payments from buyers, merchants are also equipped with advanced sales terminals and card readers with built-in contactless payment technology.

In the past few years, contactless payments have become the dominant mode of transaction across multiple retailers and industries. Both merchants and customers find this more convenient and simple, as it ensures security and speed. The funds are transferred almost instantly to the merchant’s bank account, reducing the risk of card fraud and helping retailers maintain their cash flow. Similarly, customers can eliminate the need to carry cash or even cards by using a mobile device such as a smartphone, smartwatch, or tablet to make payments at the point-of-sale terminal.

What are Contactless Payments?

Contactless payment is a secure payment mode that allows buyers to purchase products or services through credit/debit cards, smart cards, or other payment devices, such as smartphones and key fobs. The contactless system works through a short-range wireless technology, wherein the card reader can pick up or detect the signal only when the card or mobile device is placed close to the payment processor. This modern payment method works through RFID (radio frequency identification) and NFC (near-field communication).

After tapping or waving the card or other payment device over the card reader, a link will be created between the POS terminal and the bank account. After the payment is authorized, the funds will be transferred to the merchant’s account. The entire process takes place instantly, which makes contactless payments one of the fastest and most convenient payment methods.

How Does it Work?

As mentioned above, the buyer must wave or tap the card reader using contactless payment devices like cards or smartphones. Some banks and merchants also call contactless payments as tap-and-go owners or simply taps.

Let’s discuss how the process works in detail. When the cards come in contact with the payment terminal, they use RFID technology built within them. As the buyer taps or hovers the card over the POS device, the card contacts the terminal, and the transaction is processed. When the terminal accepts the payment, it gives a green signal or makes a beep sound.

The point-of-sale terminal then authenticates the card data, after which the system transfers the payment information to the card issuer. Finally, the card issuer approves the payment after verification.

Consumers can also add credit or debit cards to their contactless payment apps. These payment apps or e-wallets are the most popular payment methods that help customers make quick transactions. They can use these online payment tools to complete online and offline purchases. By adding their cards to these payment tools, they can save time by making quick transactions without entering their card details every time.

The best part about contactless payments is that they are highly secure and safe, as the consumers are not required to enter any PIN. This mode of payment is prevalent in certain nations, like the UK, Canada, Australia, and South Korea.

Shoppers can pay for offline or online purchases using credit or debit cards. These cards are designed to allow buyers to make contactless payments, as they have built-in RFID technology. That’s why they are also known as chip cards.

Chip cards that support contactless payments are not like traditional cards. With normal debit or credit cards, shoppers must swipe or tap the card and enter the card PIN to authorize the transaction. However, one can use a card or PIN in contactless payments.

To ensure that a particular merchant accepts contactless payments, look for the special symbol on their POS devices indicating that the retailer accepts contactless payments. The logo is similar to a Wi-Fi symbol.

Benefits of Using Contactless Payments

Here are some critical advantages of contactless payments, which are applicable for merchants and customers.

1.    Safe and Secure

There is a misconception about contactless payments. Many payers think that hackers can steal their card information. But since all transactions are verified and authenticated, it’s hard for fraudsters to breach card information, making contactless payments safe and secure.

Furthermore, since contactless payments involve a simple tap-to-pay technology, they are more secure and reliable than other modes of payment. The chip technology used in contactless cards is designed to protect the cardholder from fraud attacks or unauthorized purchases. Chip cards also include robust safety technologies like dynamic data and encryption.

2.    Quick and Instant

Contactless payments are fast, as the funds are settled instantly. They also reduce queues and save time for both sales representatives and customers. Besides, cardholders do not need to enter their card PIN to make a transaction. Simply tapping or waving their cards will be sufficient.

3.    Convenience

Apart from saving time, contactless payments eliminate the hassle of handling cash at checkout points. Managing large amounts of cash daily is challenging for merchants, so they can regularize their cash flow by accepting contactless transactions.

Besides, customers can go cashless everywhere, especially while traveling abroad. Carrying bulky wallets is risky and inconvenient in terms of portability. To complete a transaction at your favorite brand store, you need your smart device or chip card, and you can enjoy shopping for your essentials.

4.    Loyalty Benefits and Rewards

Many brand stores run multiple loyalty programs to offer their consumers varying rewards and benefits on purchases made with tap-to-pay cards or e-wallets. It encourages buyers to use these convenient methods more often than traditional payment methods, such as by cash or normal debit/credit cards (without the chip technology).

When shoppers use these tap-to-pay methods, they are automatically eligible to get instant cashback or discounts during the transaction. Some merchants also provide loyalty points, which buyers can redeem on their next purchases. In addition to merchants, banks and card issuers offer incentives and cashback to consumers using the contactless payment feature.

5.    Improved Customer Experience

According to studies, businesses that provide the contactless payment option to their clients successfully offer quicker and smoother checkout experience, reducing waiting periods. This way, the brick-and-mortar stores can get more returning customers, which boosts their sales and revenue. As a result, it ultimately improves customer engagement rates.

6.    Top-notch Operational Efficiency

By adopting advanced contactless payments, businesses can save their vital resources, such as time and money. It also minimizes merchants’ time counting cash, operating card readers, or other POS terminals. They can also work with lesser workforce requirements, such as fewer staff at the sales points.

Tap-and-pay methods are time-saving and can reduce queues. Therefore, fewer sales representatives are required at checkout points since a few personnel can handle sales efficiently.

7.    No Additional Costs

There are no extra processing fees involved in contactless payments. Merchants must pay the same charges as they do for other debit and credit card payments. The same fee applies to tap-to-pay transactions, similar to regular debit/credit cards. So, you don’t need to worry about paying hefty fees for accepting contactless payments.

8.    Revenue Growth

With contactless payments, businesses can build their revenue by generating more sales. By providing customers with more convenient payment options, merchants will gain more returning customers, which means more business for you.

Some card brands, such as American Express, provide a comprehensive suite to merchants and cardholders. In short, businesses can gain the advantage of criminal revenue by offering a technology that motivates shoppers to use their contactless cards instead of cash. Special credit cards offer multiple perks and benefits, such as reward points, which customers can redeem on their next purchases.

American Express Contactless Cards

American Express contactless cards are designed with the best-in-class tap-to-pay payment technologies. They have a dual interface to provide additional convenience: a) contactless technology and b) regular cards that involve chip and PIN technology. The best part is that Amex contactless cards are accepted worldwide, so you can go cashless in many countries, which can become your savior during your international tours.

Merchants are implementing this technology to encourage buyers to use contactless-enabled cards, such as the ones from American Express, that offer higher security. Besides, it is a good investment for the future growth of the business. Moreover, Amex contactless cards offer a complete fraud protection guarantee, giving merchants and cardholders peace of mind.

How to Use American Express Contactless Cards

Customers can use this contactless technology to make payments using their American Express cards. With Amex cards, the buyers must follow two simple steps: a) hold or wave the card close to the card reader, and b) wait for the device to authorize the payment. And done! The money will be transferred from their account to that of the merchant. Furthermore, with Amex contactless cards, users can enjoy top-notch customer service, an excellent fraud protection facility, and card member perks and rewards.

However, before initiating the transaction, check whether your card supports contactless transactions. Look for the contactless icon on your card, which looks like a Wi-Fi symbol. This indicates that your debit or credit card is contactless-enabled.

Similarly, check for this symbol at the shop, especially at the sales point. If the POS terminal or card reader supports contactless transactions, it should have this logo. Another excellent way is to check whether a particular retailer accepts contactless payments. The user must visit the American Express Maps portal and click on the merchant you plan to buy from. If the business has the Wi-Fi logo, you can make contactless payments at their store.

So, whenever you see this Wi-Fi logo on a sales terminal or your credit card, you can choose your convenient payment option – be it using American Express cards or making online or digital payments through UPI, e-wallets, etc.

Security Features in American Express Contactless Cards

Cardholders can enjoy the following security features in their American Express contactless cards.

• Safe and Secured Transactions: Amex contactless cards use a special Chip and PIN technology to provide safety and protection against unauthorized transactions. Besides, these cards use unique encryption keys that protect cardholders and merchants against counterfeiting.
• Fraud Protection Guarantee: All American Express card members are covered by Amex’s unique Fraud Protection Guarantee. In other words, the cardholder won’t be held responsible for fraudulent transactions. However, card members must also safely store their cards, PINs, account details, and other sensitive information to protect their cards against hackers.
• Intelligent Security: Amex’s fraud protection policies are designed by experienced experts who analyze many fraud cases to formulate a strong fraud protection technology. American Express’s security protocols and fraud protection norms are constantly improving as more sophisticated technology is implemented. The team is also developing new security techniques after analyzing the spending patterns of certain customers.
• Protection Plan: Users can purchase a fraud protection plan to cover any damage caused by accidental loss or theft of the card. However, this feature is rolled out for select Amex cards. On selective Amex cards, the cardholder’s eligible transactions may be covered for around 90 or 120 days (based on the type of Amex card). These coverages and insurance have begun since the date of the purchase using the contactless-enabled Amex card. When the card receives minor physical damage or is otherwise lost or stolen, the user is eligible for up to $1,000 per occurrence of accidental damage or card being lost.
• Travel Emergency Assistance: This feature is available on a few eligible cards. If a card member travels abroad and faces problems due to lack of cash. For emergency assistance, you can contact the 24-hour phone support service. This feature can also refer an individual to various professionals, like doctors, hospitals, embassies, lawyers, etc.
• American Express Travel Insurance: If you are trying to use your contactless payments internationally or across the country. By investing in a travel insurance policy, you will get covered for flight delays, trip cancellations, and other kinds of interruptions. The insurance also covers medical bills in case of an emergency. Furthermore, the policy also offers coverage for the loss or physical damage of personal items, such as loss, damage, or theft of bags and baggage.
• Notifications and Alerts: You can keep track of all your transactions in real-time. It helps you see where your money is going and whether fraudulent activities are burning a hole in your pocket. American Express has advanced and innovative notification and alert systems. You will receive personalized alerts and updates whenever a payment is made. You can receive these updates and alerts through SMS or email or install the Amex app to stay vigilant.

If you feel a particular transaction is unauthorized or counterfeited, contact the 24/7 customer support service. You will find the support team contact details on the back of your Amex card.

Some Helpful Tips to Use Contactless Cards Efficiently

Follow these tips to use your cards more efficiently and save yourself from lost funds.

• Avoid tapping your purse or wallet on the card reader. If you have more than one card with contactless payment options, there is a high chance that money may be deducted from multiple cards. So, always take out your desired card and pay properly by holding only one card close to the POS terminal.
• If the contactless feature of your card is not working, there may be an issue with the card reader or your card itself. Firstly, check whether the POS terminal has the contactless logo before paying. If it does and your transaction is not getting processed, or your card is not getting detected, contact Amex’s support team or apply for a new one if the old card is expired or damaged. However, there’s good news. You can still regularly use the card by swiping and entering the PIN to authorize the payment.
• Usually, there is no limit on how many times you can use the contactless feature of your card in a day. But you can ask your card issuer, such as American Express, whether there is any limit. The same might also be mentioned while opting for the new card. However, keep in mind that sales representatives may ask for the card PIN from time to time based on their system or operational requirements.

Final Words

The trend of using contactless payments and tap-to-pay cards is rising among millennials since smart devices are intensifying each day. The young generation finds carrying large amounts of cash difficult, so they prefer to go digital with their transactions and bill payments. The good news is that most Amex products have built-in contactless technology. So, dive in and use the contactless feature to travel cash-free.

In recent years, there has been a surge in the usage of credit and debit cards and contactless payments at brick-and-mortar and online stores. As a result, merchants are compelled to provide their buyers with card payment and digital payment options to offer customer satisfaction.

Most importantly, card payments are convenient for today’s consumers, who don’t like to carry huge amounts of cash, especially when traveling abroad. Moreover, merchants can eliminate the hassles of handling cash daily by accepting card and digital payments.

Apart from the convenience factor, however, using digital payments has a huge positive impact on the environment since cashless payments are greener and more sustainable. It’s a good thing digitization is evolving rapidly, as Mother Earth needs this now! Digital payments are contributing significantly to reducing our planet’s carbon footprint.

Online transactions and other cashless payments enable organizations to become more environmentally friendly by helping companies move towards sustainability. This article will discuss the impact of payment processing on the environment and how American Express green initiatives toward achieving sustainability are assisting businesses to reduce their carbon footprint.

The Role of Payment Processing and the Environment

Digitization is helping merchants provide more convenient and faster payment solutions and minimize their carbon footprint. Online transactions also enhance financial management and boost operational efficiency, such as by reducing waiting periods at checkout points. They also improve customer satisfaction, which means more business for the organization in the long run.

All kinds of traditional payments are associated with some environmental impacts. For instance, debit and credit cards are made of PVC plastic, which is non-biodegradable. These cards also emit a lot of greenhouse gases, and when they expire, they are disposed of in land or water, which increases pollution.

On the other hand, cash payments involve large amounts of energy consumption outside the central bank engaged in cash supply. High amounts of fuel and electricity are required to produce coins and banknotes at the cash sorting centers, which the cash management companies handle. Furthermore, large amounts of electricity are consumed at the cash ATM networks.

Cash transportation also requires vehicles on the roads that run on fuel, such as diesel. When cash is transported between cities and towns, tons of CO2 are emitted yearly. So, both cash and card payments affect our environment in multiple ways.

However, with digital payments, fewer data stops are required. Also, there is little to no involvement of middlemen in cashless payments. On top of that, the funds are deposited to the receiver’s bank account instantly. According to studies, an instant deposit of funds can produce about 80% less carbon dioxide.

Mobile wallets and virtual cards are the most commonly used platforms in digital transactions. Both of these can successfully eliminate paper receipts, thus saving trees. According to a 2019 study from Climate Action, paper receipts use up over 3 million trees and 9 billion gallons of water annually in the United States. Besides trees, paper receipts also generate an alarming rate of CO2 emissions, equivalent to 450,000 vehicles on the road.

To increase the sustainability factor on eCommerce platforms, website owners and online merchants are implementing multiple plugins and other eco-friendly strategies enabling companies to reduce greenhouse gas emissions. This way, companies are helping consumers adopt sustainable shopping methods by reducing these harmful emissions often linked with the products and services they buy.

Moreover, digital card readers or POS terminals are helping businesses run fundraising campaigns to support some charitable or noble causes they are passionate about. They have initiated the provision to allow customers to make some donations along with their purchases. This will send out positive vibrations to the universe, and as a result, we are helping the people around us.

American Express Green Initiatives

American Express promotes the importance of maintaining and implementing sustainable business practices to protect the health of all customers, cardholders, and colleagues. This reputed card network has put forward noble initiatives, as mentioned in the 2022-2023 Environmental, Social, and Governance (ESG) Report of American Express, to ensure the safety of the community and the upcoming generations.

Amex has developed sustainable and eco-friendly business practices in all its operations, including the official buildings it manages its operations from, the business strategies it follows, and the materials it uses. Its primary aim is to reduce nations’ environmental footprint. Amex uses natural resources economically to save them for present and future generations.

How American Express Managed Environmental Impact?

American Express was awarded the prestigious title of CarbonNeutral company in 2018 because of its efforts in reducing GHG (greenhouse gas) emissions, utilizing renewable energy sources, and carbon offsets. American Express has set new goals and objectives to minimize the environmental impact of payment processing.

For instance, Amex aims to decrease the utilization of one-time-use plastics through its manufacturing and processing units. By 2025, the card issuer has also set goals to decrease water consumption and waste generation. Besides, American Express is working towards sourcing all its paper from certified and responsibly managed forests.

Furthermore, American Express is involved with numerous global initiatives to develop a more sustainable future. One such initiative is the Earth Hour since its introduction in 2007. Amex has also offered about $2 million in grants to the Ocean Conservancy and National Geographic Society, which intends to fight and reduce marine pollution through multiple clean-up programs and campaigns.

Earlier in the Earth Month of April, American Express announced its new initiatives to promote and develop low-carbon communities. The card network also focuses on expanding its Carbon Footprint Tool by rolling it out for select corporate clients. The company has also set up a digital pilot to enable US consumers and small business cardholders to understand their carbon footprint.

Moreover, during Earth Month, American Express has returned its “Shop with Purpose” offers for select card members. Amex continues to offer Green2Gether volunteer activities for employees and colleagues. In addition, during Earth Month, American Express introduced modern and intelligent digital solutions that enabled its stakeholders to understand estimated carbon footprints better.

These stakeholders include small business card members, US consumers, and eligible corporate clients. Madge Thomas, American Express Foundation’s Head of Corporate Sustainability and President, stated that all the above initiatives are based on Amex’s commitment to advancing climate standards and protection policies to make the world a better place for consumers, colleagues, and communities.

What is Corporate Sustainability?

Corporate sustainability is an all-comprehensive approach to operating a business while accomplishing key goals like social, environmental, and economic sustainability. A sustainable corporation realizes that its operations and actions have deep and significant consequences on the environment and future generations. It motivates them to adopt strategies to minimize the harmful impacts of their business operations and work practices to bring about positive societal and environmental change while boosting corporate growth.

The key elements or pillars of corporate sustainability include the following.

• Environmental: Corporate sustainability involves practices that address the organization’s ecological consequences on our earth by minimizing and limiting emissions, natural resource consumption, and waste production. More corporate offices are adopting eco-friendly work practices, like reducing water consumption, utilizing renewable energy sources, and promoting sustainable supply chain management.
• Governance: Companies aim to generate profits and a good ROI in a balanced way while developing long-term value for all its stakeholders. This initiative involves responsible investment decisions, stable and smooth financial management, maximizing profits, and promoting ethical business practices.
• Social: Under social sustainability practices, the organization’s responsibility is to positively impact social structures through inclusion and diversity within the workforce. Furthermore, companies ensure fair labor approaches and practices, safeguard human rights, and support local communities.

Some of the benefits of promoting and establishing corporate sustainability practices are:

• Mitigating operational and management risks
• Improved company reputation, thus attracting more consumers, skilled personnel, and investors
• A reduction in environmental degradation, mitigating the potential threats of climatic change, and biodiversity preservation
• Achieving a competitive advantage over rivals and gaining access to new markets
• Accomplishing higher cost savings and bringing innovation within the organization
• Boosting and strengthening relationships with various stakeholders, such as employees, consumers, investors, and communities

Therefore, being a holistic approach, corporate sustainability can mitigate risks, boost revenue, develop brand reputation, attract new investment opportunities, and minimize costs.

Case Study: How American Express is Achieving Sustainability

1. American Express has found concerning areas in the environment of Australia and New Zealand. While Amex focuses on building sustainable practices globally, the concerns were prominent in these two nations. Amex created a report after measuring the eco-friendliness in Australia and New Zealand (A/NZ). The report includes details about the water produced, harmful emissions, every utilization, and Green Building certification.
2. Apart from the Amex A/NZ report, there is another one from them. The American Express 2022-2023 Environmental, Social, and Governance (ESG) report provides an overview of their progress on ESG initiatives and approaches. Under the ESG strategy, American Express aims to continue supporting customers, communities, and colleagues to promote a positive impact on the environment.

The ESG report revolves around Amex’s progress on the three major pillars of the ESG strategy: implementing advanced climate solutions, building financial confidence, and promoting equity, diversity, and inclusion. Furthermore, the 2022-2023 ESG Report by American Express is glued to the reporting frameworks and standards mentioned below.

• Sustainability Accounting Standards Board (SASB)
• Global Reporting Initiative (GRI)
• Task Force on Climate-related Financial Disclosures (TCFD)

1. The Carbon Footprint Tool from American Express is designed for corporate clients and can incorporate additional spending categories for eligible clients. It helps them track and estimate the estimated carbon emissions associated with spending on ground transportation, air travel, food and beverages, hotel stays, and retail.

The Carbon Footprint Tool complies with the conversion standards and factors set by different private and governmental organizations, corresponding to the organizations’ spending on their Amex Corporate Product program. Users can access this tool when clients start logging in to their Commercial Insights. This is a suite of tools and handy digital solutions provided to American Express’s largest corporate clients.

Furthermore, this tool joins the Corporate Carbon Referral Suite, which aims to offer US Corporate clients a comprehensive list of carbon offset solution providers. These are fine-tuned and especially curated by American Express. The participating organizations may work with these providers to invest in carbon offset across large-scale carbon projects. These investments may help companies manage their projected carbon footprint.

1. Here’s good news for card members. They can now participate in American Express’ new pilot experience, which enables eligible small business card members and US customers to understand their environmental effects more efficiently. As a result, it significantly contributes to reducing the efforts and usage of resources to remove carbon. The new pilot digital suite by American Express provides the following features and tools.

• Contribution Services for Carbon Removal Projects: Under these projects, eligible US Amex card members can establish a convenient automatic monthly contribution that varies between $5 and $100 through the Cloverly program partner. These contributions play a huge role in building a good portfolio of carbon removal initiatives while supporting the health and safety of local communities.
• American Express Estimated Carbon Emissions Tracker: Amex developed this tool by partnering with the CoolClimate Network at the University of California. This unique carbon emissions tracker can effectively analyze spending made via an eligible Amex card. The tool also measures the carbon emissions associated with such card purchases. It helps them design and implement more eco-friendly transaction processes.
• Insights on Carbon Reduction: Carbon Direct provides many helpful tips and recommendations to card members regarding reducing their carbon footprint. This informational tool helps American Express cardholders implement more sustainable practices in their day-to-day activities, especially related to transactions.

1. “Shop With Purpose” is a unique selection of offers and benefits available for card members through April, Earth Month. This is the second year Amex has organized this offer and made it available to select US small business cardholders and consumers. Buyers will receive gifts and rewards on their purchases, provided they use an eligible Amex card to make the payment at any retail outlet.

American Express’s Environmental Goals for 2025

American Express has made a promise to achieve the following environmental goals and objectives by the year 2025.

• Energy and Emissions: Amex will remain carbon-neutral in all its operational and managerial practices. It will aim to reduce its energy usage by 35% across all its managed facilities, a significant improvement from 2011. Moreover, the card network will continue to operate with 100% renewable energy sources. The good news is that Amex has already achieved net-zero GHG (greenhouse gas) emissions.
• Sustainable Sourcing: American Express is working towards eliminating all usage of single-use plastics throughout its operations. Also, as mentioned earlier, Amex has started sourcing all its office paper (or any other paper required in customer communications and direct marketing) from certified forests that are sustainably managed. Besides, Amex has eliminated single-use plastics, stirrers, and plastic straws to boost a positive environmental impact.
• Waste Reduction: American Express is taking initiatives to reduce waste generation by 10% per employee. All these waste products come from across its managed facilities and manufacturing units. This is a stark improvement from 2019. To accomplish this goal, Amex has already developed a baseline of 135 kg per team member. Additionally, it has removed all single-use plastic cup usage from its operational and regulatory centers and implemented a robust compositing program.
• Green Building: American Express is working on achieving Green Building certifications across 80% of its operations.

How can merchants participate in and benefit from green initiatives?

Now, we know that participating in green initiatives has innumerable positive impacts. Here are some ways merchants can take a step towards obtaining sustainability.

• Reduce packaging waste by using more sustainable and renewable or recyclable packaging.
• Use more suitable materials and explain how and why these materials are sustainable. Otherwise, you may be engaging in misleading greenwashing.
• Establish more recycling programs to encourage consumers to recycle their used products or packaging.
• Use recycled materials like paper, plastic, or glass to produce their goods.
• Educate the consumers on why and how they should recycle to contribute towards reducing the carbon footprint.
• Use sustainable wood, such as cork, bamboo, or reclaimed wood. Such practices will help minimize deforestation, thus restoring natural habitats.

Key Takeaways

In conclusion, merchants should contribute as little as possible towards achieving net-zero emissions. American Express is already working on its sustainability goals by sourcing raw materials from renewable energy sources. Let’s learn from Amex and help them achieve sustainability by doing our part.

The biggest concern for any merchant is the processing fees they need to pay to accept card payments. Besides transactional fees, other charges may be associated if you hire a payment processor – a payment solution provider that acts as the bridge between the merchant and the bank. So, a payment processor is responsible for transmitting transactional information from the customer’s credit card to the bank accounts of the customer and the merchant.

Sadly, many payment processors charge hidden fees, which merchants often pay for unknown reasons. If paying high payment processing fees is challenging, Amex or American Express Merchant Services is your best solution. Amex has a transparent pricing plan and offers a robust package for merchants across diverse industries.

Now, you need to open an American Express merchant account to accept electronic payments from customers seamlessly. This particular bank account enables businesses to receive and process e-payments. So, a merchant account acts as the middleman between the customer’s and the company’s bank account. A merchant account is the intermediary that holds the funds after accepting the transaction from the customer until the funds are transferred to the merchant’s regular financial institution.

This article will discuss why American Express is the best merchant service solution for your business and how you can become an Amex merchant in simple steps. Furthermore, we will also understand the fees associated with Amex merchant services so you can make informed decisions.

An Overview of American Express Merchant Services

Merchants are often confused about the solutions provided by American Express merchant services. You may have doubts or queries regarding Amex merchant solutions’ settlement procedures, discount rates, and pricing models. Let’s discuss them in detail.

How Do American Express Merchant Services Work? Why is Amex Different?

What’s more impressive about American Express is that it works via a closed-loop network. That means that Amex will open merchant accounts directly for businesses that accept Amex cards and issue credit cards directly to Amex cardholders.

This is where American Express is different from other card brands. For example, Visa and Mastercard connect with various banks to issue credit cards to cardholders. Furthermore, these card brands do not provide merchant account services, such as opening or maintaining merchant accounts for business owners. Merchants should rely on credit card processors to open and manage merchant accounts.

But thanks to American Express for offering merchants all-inclusive solutions for opening and maintaining merchant accounts, enabling them to manage customer payments smoothly daily. Amex is not answerable to or linked to any other financial institution for acquiring or issuing credit cards. Therefore, the merchant and credit card service provider can independently set its discount rates based on market conditions.

What we found impressive about American Express is that it has set a flat rate equal for all payment processors. Furthermore, it does not allow any payment processing system to add a markup charge. Although the rates for processing Amex credit cards were initially higher than processing Visa or Mastercard credit cards, the multinational financial services brand has recently modified its pricing models. We will discuss these newly introduced pricing plans towards the end of the article.

Benefits of Accepting American Express Cards for Your Business

You might be wondering whether it is profitable to accept Amex cards. We know your worries stemmed from the relatively high discount rates and highly delayed fund settlements, which may affect business operations and resources. However, in recent years, American Express has made innumerable upgrades and changes in its pricing plans and transaction settlement speeds.

So, instead of being skeptical about the benefits of accepting American Express transactions, it’s time to consider the new pricing models, such as Amex OptBlue. This newly launched pricing plan has immense potential for keeping your American Express payment processing charges low while settling the funds faster than the traditional Amex merchant solutions.

However, you should know that even with OptBlue, your Amex processing charges will be higher than those for Mastercard and Visa card payments. But it is significantly lower than what merchants used to pay earlier.

So, considering whether to accept Amex cards, consider the two major factors: your business’s cash flow requirements and customer demands. If you would be profitable by accepting American Express credit cards, why not go for it?

For instance, you cannot accept American Express cards if your business is associated with travel and tourism, food/restaurant service, or the entertainment industry. That’s because of higher customer demand, and you will come across multiple Amex cardholders.

Similarly, while catering to a professional client base, you must accept Amex payments based on your client’s demands. Furthermore, many corporate cards today are American Express cards since they provide impressive rewards for every transaction. So, Amex is typically the first preference for more wealthy clients who love traveling with American Express credit cards.

Businesses can enjoy the following benefits by accepting American Express credit cards.

• The discount rates may not be as high as you think, especially after the launch of the Amex OptBlue pricing model.
• You can protect your business against fraudulent activities and other data breach threats, thus safeguarding your clients’ sensitive card information.
• Merchants can get 24/7 support service to promptly address any payment-related issues.
• Small businesses in the US can gain access to about 3X higher spending capacity compared to competitors.
• You can reach Amex card members who make an average annual spending of 3X compared to other non-card members.

American Express is the fourth-largest credit card company globally, and that’s for good reasons. You might lose many clients for not accepting Amex cards. That’s because American Express cardholders find paying using this highly-rewarding card convenient. So, if you are not accepting Amex cards, you indirectly tell your clients that you value paying lower transaction rates more than valuing their convenient mode of payment. Modern-day businesses should focus on providing higher customer values to be more profitable in the long run.

How to Become an American Express Merchant?

If you are willing to accept American Express cards in your business and wish to open an Amex merchant account, here are the two simple steps.

Step 1: Consult a Payment Processor

To open an American Express merchant account, it may not be mandatory to contact Amex directly unless, of course, you are processing transactions of $1 million or more in a year. Otherwise, you can request your credit card processing company to open an American Express merchant account on your behalf, if you have decided to start accepting Amex payments. Make sure to use the OptBlue pricing model while opening your Amex account.

Your payment processor should be able to integrate your Amex merchant account into your current credit card payment gateway, POS device, or other payment processing solutions. It will ensure that all Amex card transactions are received, authorized, and processed through that system. However, if you are yet to get a payment processor for your business, your first step would be to opt for one by finding a reputable payment processing company.

Step 2: Transfer Your Amex Merchant Account

It’s essential to keep in mind that your business cannot have more than one American Express merchant account. So, if your payment processor has already opened an Amex merchant account earlier, you cannot open a second account, even if you have changed your processor. So, if you are already an Amex merchant account holder, continue using it to accept Amex card payments.

Therefore, you must link your new payment processor with your existing Amex merchant account number. It will help the credit card gateway, machine, or other POS equipment to refer to that account number while processing your Amex sales. Contact American Express directly if you have forgotten or lost your existing Amex merchant ID number. That’s because a payment processor won’t be able to recover a lost merchant account number on your behalf.

If you have never opened an Amex merchant account, you can proceed towards opening a new account. Your payment processor will help you with that. After successful registration, it’s time to link your account ID with your payment processor to start accepting Amex payments.

The American Express Pricing Plans You Should Know

The current pricing plans for American Express merchant accounts include Amex ESA and Amex OptBlue. Here’s a detailed overview of fees associated with Amex merchant services.

●      Amex ESA

American Express ESA, also known as Amex Direct, is a direct processing program that allows businesses to have a merchant account directly with Amex. It is a dedicated merchant services account, and American Express is responsible for settling transactions. Therefore, all the payment processing procedures, such as fees and fund deposits, are managed exclusively by American Express.

In the Amex ESA pricing model, merchants will automatically receive a bill from American Express at the end of every billing cycle. This billing structure is separate from any other bill merchants may receive for Mastercard or Visa transactions. Amex Direct or Amex ESA follows a flat-rate structure that was implemented before launching the more optimized OptBlue pricing program.

When a merchant has a direct account with Amex, the total Amex transactions they receive and process should be above $1 million. So, if your business is already processing $1 million yearly with Amex, you should have a direct account with this merchant account service provider. However, Amex allows some particular industries to process payments of less than $1 million, and they can still enjoy the benefits of an American Express Direct merchant account.

●      Amex OptBlue

Amex OptBlue is the latest pricing plan similar to Mastercard and Visa’s. The OptBlue model was launched in 2015 to replace the previous Amex OnePoint plan (also called the Amex Full Service plan). The American bank holding company rolled out this pricing model, and merchant solution to help payment processors manage merchant accounts efficiently and add an appropriate markup.

The Amex OptBlue pricing plan offers a paradigm shift for merchants to help them reduce their Amex payment acceptance costs. However, many business owners are still unaware that this new model has huge potential for merchants to save a few extra bucks for accepting Amex card payments.

If you are new, try the American Express OptBlue package. It enables business owners to open an Amex merchant account via a credit card processing company instead of getting it directly from American Express.

After replacing the previous Amex OnePoint model, OptBlue can efficiently streamline settlements and authorization and successfully report all American Express transactions. Moreover, unlike OnePoint, OptBlue is designed to help payment processors add a markup charge on top of Amex’s base rates. It allows the system to create different processing rates for Amex based on other processors.

The American Express OptBlue model is similar to the procedures of Mastercard and Visa. Both these companies have a flat base rate, commonly known as interchange rates, to which the processor adds its respective markup fee.

Although Amex’s base rates are not termed “interchange rates,” they work similarly to those of Visa and Mastercard. The base rates remain the same for every processor and are non-negotiable. The total processing fees vary only because of the variation in the markup fees, which differ for every processor.

An Overview of Amex Discount Rates

American Express’s discount rates depend significantly on your merchant category code (MCC). A credit card company uses this MCC number to categorize different purchases based on the merchant type. It is a four-digit number that the credit card company assigns to different businesses. The Merchant Category Code is used for multiple purposes, such as calculating or reporting credit card/cashback rewards. Besides, an MCC number denotes the amount a merchant must pay while accepting debit or credit card payments.

Unlike the interchange fees of Mastercard and Visa, Amex discount rates have fewer eligibility criteria. When a transaction is made using the keyed-in methods, that is, when the card details are entered into the payment processor manually rather than swiping the card, Amex discount rates for restaurants and retail outlets will decrease (meaning the total rate will increase).

Therefore, encourage your customers to swipe in their cards rather than keying in the card details to enjoy good discount rates. However, irrespective of the transaction method, most rates will remain the same. Moreover, Amex does not charge a discount rate or a credit card payment processing fee for every industry type or category. Many Amex processing rates include a percentage-based fee (discount rate), which does not include a transaction fee.

However, to sum up, all credit card processing companies will charge merchants a specific fee for processing American Express card transactions over their network. This means that even if Amex does not charge you a processing fee directly, you will have to pay your credit card processing service provider a transaction fee to receive and process Amex card transactions.

The Settlement Process of American Express

Merchants accepting Amex transactions must know that some American Express payments take longer to settle than Mastercard and Visa transactions. In other words, the funds may take longer to transfer to your linked business account than when Visa and Mastercard payments are reflected in your bank.

Visa and Mastercard transactions are usually settled within 24-48 hours, except in some cases of processor-imposed risks. In short, after the authorizations are approved and sent to the payment processor, the funds will get reflected in the merchant’s checking account within 24-48 hours for Mastercard and Visa card payments.

However, American Express transactions usually settle in the merchant’s account almost twice as fast as Mastercard and Visa transactions. The Amex card funds may take 3-7 business days to transfer from the customer’s account to the merchant’s checking account. The only exception is when the merchant enrolls in the Amex OptBlue pricing model.

The OptBlue pricing plan works by settling all the card transactions of the month and other card transactions, including Visa, Mastercard, and Discover sales. So, it’s time to say goodbye to delayed settlements and receive separate statements for American Express card payments because all transactions are settled in a single deposit. Unlike traditional Amex merchant accounts, it also ensures faster fund transfers and lower transaction rates.

Final Words

We hope the article guided you to decide whether to accept American Express cards for your business. It all depends on customer demands and your industry. Also, consider your cash flows to decide which pricing model will be most suitable for your business.

We suggest you start accepting Amex cards to widen your customer base. You will see positive results in the long term. Plus, it’s important to make your clients feel more valued so they will keep coming back to your store.

Stax Payments, one of the leading payment service providers, has recently announced the acquisition of APPS (Atlantic-Pacific Processing Systems) to provide its users with a seamless and all-in-one payment service platform. The latter is a payment processing company. In a press release published on October 17, Stax mentioned that this acquisition is going to boost its payment processing capabilities. With the help of APPS, the company will be able to handle all kinds of transactions, chargebacks, processing requests, and other financial services more efficiently and securely. It also caters to the customers’ increasing need for a feature-rich platform, which offers all payment services under one roof.

APPS will now be renamed to Stax Processing and the platform will be used to offer FinTech services to all kinds and sizes of businesses across the globe. Their main goal is to serve companies that make software, offer payment services, and small-scale organizations that often struggle to ensure the smooth running of their business. This will make it possible for Stax Payments to cover a wider audience in the FinTech and payment industry.

APPS is known for developing tech-based software solutions that provide businesses with a platform to handle financial services effectively. There are currently over 50 employees working for APPS, and all of them will join Stax Payments now. The Chief Executive Officer of the Las Vegas-based payment processing company, Abe Maghaguian, will become the Chief Payment Officer at Stax. The press release doesn’t specify anything about the money involved in the acquisition. The companies have not elaborated on their collaboration either.

Insight Into the APPS Acquisition By Stax Payments

Employees at Stax have remained silent about the date and details regarding the APPS acquisition, although we do know that employees of APPS have already joined the Orlando-based company. Sarah Gerald, who worked as the Chief Operating Officer (COO) at Atlantic-Pacific Processing Systems has mentioned that she works as COO at Stax in her LinkedIn profile.

It’s not the first time we have heard about a merger that involves two payment service providers. It’s been happening more frequently, as businesses have started realizing the power of working together to bring everything a customer needs in one place. This saves them the hassle of downloading multiple applications or collaborating with different companies for varying financial services. The collaboration also strengthens the human resources, work efficiency, security, integrity, and other aspects of your services. APPS’ CEO says the same. He believes that Stax and APPS can offer a one-stop platform for small businesses, financial service providers, and multinational companies looking for a single, centralized, and robust system for payment processing.

APPS is one of the popular payment processing companies, known for serving more than 15,000 clients based worldwide. A few popular names in its portfolio are Visa (a famous credit card company) and Intuit (a financial software provider) among others. It’s clear that this partnership will put Stax in a better position, allowing the company to attract more profitable deals. They can also strengthen their partnership with some famous tech giants and financial service providers in the FinTech industry.

As mentioned earlier, the merger of APPS and Stax Payments has resulted in Stax Processing, which will serve as a one-stop payment service provider for businesses in different industries. This includes software developers, payment facilitators, independent contractors, small to mid-sized businesses, and so on. The press release suggests that this acquisition will help Stax offer its customers the ability to customize the solution to their requirements. In addition to customization, businesses will get better reporting functionality. This means they will be able to collect more data about their financial transactions and customize the solution however they like.

Paulette Rower, the new Chief Executive Officer of Stax, mentioned that she wanted an embedded payment system, where the payment processing and financial services could be embedded into the business management software, making payment processing hassle-free for businesses. It seems like the merger between APPS and Stax seems to align with Paulette’s goal. The embedded payment system will streamline payment processing.

This will prove beneficial for all sizes and types of organizations that work with Stax Processing but is particularly more beneficial for small-scale organizations that often struggle to juggle management, financial transactions, and other core business operations. They can now enjoy payment processing functionalities within their existing systems, making the overall process more efficient and better than usual. In an interview, Stax’s new CEO mentioned that the whole purpose of the acquisition was to streamline payment processing and make it a simple deal for businesses. They can enjoy greater flexibility, multiple customization options, and the ability to scale at their convenient pace without being restricted by the complexities of the payment industry.

Stax acquiring APPS is part of the bigger picture where many payment companies have merged. A few popular mergers within the industry include:

• SpotOn’s acquisition by Shift4 Payments
• NMI and Sphere merger
• Fiserv, a payment service provider and the parent company of Carat and Clover acquired Skytef to grow its name in the international markets.

These mergers suggest the partnerships between payment service providers and how beneficial it is, not just for the companies, but the clients it serves.

When talking about what it will bring to the table from its merger with APPS, the company mentioned that it plans on introducing new payment services within this quarter. The integration with APPS and the introduction of new features and services will continue in 2024. Stax will continue to expand its operations and add new features to its portfolio, providing its clients with extensive and streamlined payment processing services.

The CEO of Stax said that the acquisition of APPS has improved its ability to offer better financial services while focusing on innovation, more now than ever. This innovation, which results from the merger, will help businesses come up with a customized plan that fits their payment processing and financial service requirements. Businesses that worked with APPS or were part of Stax are also looking forward to the benefits that come with this merger. After all, a unified platform that offers all types of payment services and payment processing benefits in one place is something that can help every business.

What Customers Want

Surprisingly, this news has come at a time when 1 in 6 small-scale businesses are planning to switch their payment processors. A report by Enigma shows that many companies want a simplified and centralized payment service that could provide them with all payment-related services under one platform, while offering additional features, like reporting and analytics, staff management, customer management, and so on.

Most importantly, businesses need a solution that can integrate flawlessly with their existing management system, so that there’s no need to replace the existing unit. Another report by PYMNTS shows that the biggest factor a customer considers when choosing a payment processing service is the transaction fee. Since that’s going to affect their budget and the bottom line, it’s obvious they will want to stick to the processor that charges a reasonable fee and offers exceptional services.

A vast majority of these clients come from hospitality businesses, as people in these industries are highly likely to switch payment service providers to get the best deal at the best rate. The report also says that price, though important, is not the only factor that SMBs take into consideration when choosing a suitable payment processor. Many factors matter.

Given the level of convenience and efficiency people want from their automated software solutions, it’s natural that they will expect the same convenience from payment processing units, be it the hardware, software, or a combination of both. Around 54% of the clients in the construction and retail businesses, especially businesses that have been around for less than five years, need a system with robust security and fraud detection programs.

Despite all this, many small businesses are satisfied with the level of service and features they get from their payment processors and are not considering switching merchant service providers either. The report says around 85% of customers are okay with their payment processors. That means there’s still a lot that the emerging payment processing and financial service providers have to do to catch the attention of this audience and expand their clientele base to the domestic and international markets.

Stax Improved Its Payment Service Infrastructure With New Acquisition

The acquisition of APPS is indeed one of the biggest milestones Stax could achieve. That’s because the type and nature of businesses that APPS has partnered with so far shows the credibility of the company and the scope for a business that acquires it. The acquisition won’t just give Stax a chance to innovate and offer premium services to its existing clients, but it means the company will get broader exposure and some reputable clients that worked with APPS.

As mentioned before, the advanced functionalities and the new version of Stax, renamed Stax Processing, are all set to be released in the last quarter of the year and will continue to make an impact in the coming year. The company will also release its upcoming integrations and plan for future developments in 2024.

How Will the Acquisition of APPS Benefit Both Companies?

Let’s take a quick look at the ways Stax and APPS can benefit both companies, as well as their clients.

• Better Services: Stax is a payment service provider, but lacks many features that APPS has. The integration of the two will enable Stax to expand its existing range of services and provide financial services to a wider audience. That’s the reason why Stax has mentioned that it’s planning to launch many additional functionalities and integrations once its acquisition of APPS is over.
• Increased Clientele Base: APPS is known for its huge clientele base, which covers Independent Software Vendors, SMBs, and Independent Sales Organizations. While Stax also enjoys a decent customer base, the integration with APPS will provide it with better exposure. The company can connect with clients from different industries. It will increase Stax’s clientele base, plus provide it with an opportunity to work with some reputable companies in the financial sector.
• Expertise: More than 50 employees, who were once a part of the APPS team, have joined Stax Payments. The additional workforce will bring a lot of innovative ideas and talents to the table. This will further enhance Stax’s ability to improve its payment infrastructure.
• Gain Competitive Advantage: As mentioned previously, many SMBs have been considering switching their payment processors. They are looking for a single, centralized place where they can enjoy all payment processing and financial services without switching the software applications. Stax and APPS integrations will help customers get all payment services in one place, thus giving the team a competitive advantage.

About Stax: Price and Features

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Formerly called Fattmerchant, Stax is a popular merchant service provider that has gained popularity for its versatile and reasonably priced payment processing services. It’s great for businesses that process transactions above $5000 every month and are looking for a solution that comes with a 0% interchange fee.

It’s no markup on interchange fees is its biggest benefit. The company imposes a flat monthly fee that it charges in addition to the payment processing fee, which is quite reasonable for a mid-to-large-scale organization. Its pricing model can save money for some businesses. It’s no markup on interchange can offset its monthly subscription fee.

In addition, the company offers many unique add-ons, including a feature that allows you to set up your online store quickly or sell gift cards. The solution is also customizable for invoices, receipts, and other services. Stax accepts all kinds of payment methods, including keyed, in-person transactions, mobile, and invoice payments. The best part about Stax is that it doesn’t bind you to any contract. Unlike Clover and other payment processing solutions, there’s no fixed length for its agreement. You can cancel the plan anytime without incurring an early termination fee. The platform is compatible with QuickBooks, Xero, Zoho, HubSpot, etc. They offer support 24/7 through phone, live chat system, and email.

Pricing

Stax doesn’t come with a contract and gives you an option to select your terminal. They offer three subscription plans and a custom plan for large-scale businesses that need additional, custom features. Although there’s no makeup on interchange, the company has implemented a processing fee, which is charged in addition to its monthly subscription fee. You can choose from Growth ($99/month), Pro ($159/month), and Ultimate Plan ($199/month).

In addition, you are supposed to pay an interchange fee plus a payment processing fee, which ranges from 8 cents to 15 cents. You can buy its card reader for $300.

About APPS

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APPS or Atlantic-Pacific Processing Systems is a payment solution that works for businesses of all sizes, natures, and types. It’s an omnichannel payment processing company, offering scalable, customizable, and end-to-end payment processing services that can help businesses process their credit card transactions and contactless payments seamlessly. The platform supports small businesses, independent contractors, software developers, large-scale organizations, and retailers in providing highly optimized payment services to their customers.

Not only for payments but APPS is known for its chargeback management system that supports automation and easy handling of different chargeback cases. The system accepts payments through keys, card swipes, EMV transactions, and all forms of contactless payments. If your customers do not want to swipe or key their cards into your retail POS system, APPS accepts contactless payments. All reputable digital wallets, including Apple Pay and Google Pay, are acceptable. In addition, it supports ACH and check processing. Finding the right gateway is one of the biggest challenges for a business. Well, APPS helps here too. The platform supports more than 100 payment gateways, all of which are reputable and have flexible terms and conditions.

What else? With APPS, you never have to worry about picking the right ERP, CRM, and shopping cart solutions. They have partnered with many software developers and can help narrow down your list to the most viable solutions for your business.

Conclusion

APPS acquisition by Stax Payments is one of the many mergers we have seen in October 2023. Driven by the increasing demand for a single centralized payment processing unit, this merger won’t just benefit the two companies, but it can streamline payment operations for small-scale businesses, independent contractors, and all kinds and sizes of businesses that rely on either of these platforms for payment services.

The integration of the two will enable both groups to innovate and work together as a unified platform to offer exceptional customer service. Although the companies have not disclosed any details regarding the price of the acquisition or the new transaction fee and costs, they have made many things clear. To name a few, the integration will bring a lot of new functionalities, which will customize the platform and offer better security, plus improved reporting features. Moreover, the company will be renamed as Stax Processing. Customers await the integration, which will hopefully result in one cohesive platform.