American Express has a well-deserved reputation among merchants as the more expensive alternative to Visa and MasterCard. This is because the company sets its own rates for credit card processing and has historically not allowed merchant account providers to alter or customize these rates in any way. As a result, American Express has long been perceived as an unnecessary lose-lose proposition for small business owners—you can either cough up the higher, non-negotiable per-transaction fees, or you can turn away your Amex-carrying customers at the register.
All of this has changed in the last six months with the gradual rollout of American Express’s OptBlue program. Intended to eventually replace the American Express OnePoint program (which in 2007 enabled merchant account providers to bill for Amex transactions alongside Visa/MasterCard transactions), Amex OptBlue finally allows processors to set their pricing for American Express transactions in the same way that they price their Visa/MasterCard rates.
For merchants, this means that not only are Amex rates now negotiable, but they can also be priced under the interchange-plus model. Credit card processors who are members of the OptBlue program will receive low wholesale rates from American Express, which means that they are permitted to mark up their earnings above these rates. Merchants can then negotiate for a fair, flat per-transaction markup over American Express’s rates—also known as interchange-plus pricing.
Merchants should keep in mind that although Amex’s wholesale costs may be slightly higher than Visa and MasterCard, their interchange-plus rate should not increase for Amex transactions. Under interchange-plus pricing, whether the wholesale cost is 1.9% or 3.9%, the provider should still make the same fixed markup above wholesale costs.
Current members of American Express OptBlue include First Data, EVO, Merchant e-Solutions, First American Payment Systems, Vantiv, Global Payments, Heartland Payment Systems, WorldPay, Transfirst, and JetPay. Some ISOs and other resellers of these companies may also have access to the OptBlue program.
I am a new member to the OPT-BLUE as a credit card holder. The name says it ALL, thanks American Express I love your new position in the credit card war. Happy to hear that rates are lower than previous years for the merchants. I will use it exclusively for these days forward.
This is good, I do need to know if my account goes over $1,000,000 in one year will they lose Blue say if they just had a real good year will they change over or do they have the choice to keep blue and see how it will and if it falls off and the next month or year they need to go back?
First Data claims that their OptBlue rates are non-negotiable even though we process almost $1MM/yr. in American Express transactions. Our Visa/MC/Discover rate is Interchange plus 1 basis point, but their reps are insisting that the 55 basis point Discount and 15 basis point Network Fee are something they can’t control.
Clearly I’m talking to the wrong people. Who should I contact about this?
This is great for the small business, this will keep more money in their pocket, at the same time AMEX transactions should really pic up now that people can use them more places.
Very cool this should really be a relief for the smaller merchants.
This should put Amex in the game and allow the merchants more options.
I believe the new Opt-blue program is definitely a step in the right direction in changing merchants perception of the Amex brand. It provides them the flexibility to offer customers more choices at a better rate.