Why Aren’t American Express and Discover Credit Cards Accepted Everywhere?Here's why Amex and Discover are less attractive credit card options to merchants.

Visa and MasterCard dominate the market when it comes to credit cards that retailers accept as methods of payment. In comparison, it sometimes seems that American Express and Discover are shunned by merchants. In 2015, Visa cards accounted for nearly 56 percent of all purchase transactions worldwide, and MasterCard accounted for almost 26 percent of transactions. American Express, however, accounted for just over 3 percent of transactions, and Discover accounted for less than 1 percent, according to the Nilson Report.

To understand the differences among the credit cards and how they might affect you as a cardholder, learn how credit card fees and other factors contribute to the more limited acceptance of Amex and Discover cards and how these two cards position themselves against competitors.

Why You Still Can’t Use an Amex or Discover Credit Card at Some Stores

Of the “Big Four” credit cards — Visa, MasterCard, Amex and Discover — Amex is the oldest, founded in 1850 through the Dow Jones industrial average, and Discover is the youngest, first offered by Sears in 1986. In the past, Amex and Discover marketed themselves as more exclusive than other credit cards on the market; previously, both cards were symbols of exclusivity, with a limited number of retailers accepting them.

Technically, the limited acceptance of the two cards is not a matter of retailers rejecting them as a form of payment; rather, Amex and Discover are different from other credit cards because merchants must choose to accept them.

Compared with MasterCard and Visa, Amex and Discover target a more specific group — generally, more affluent customers — and charge higher merchant credit card processing fees. It is these more costly credit card processing fees that prevent some businesses from choosing to accept Amex and Discover at their cash registers.

The credit card processing fees for Visa and MasterCard currently range from about 1.10 percent to 2.95 percent. Historically, Amex has charged higher than its competitors — the highest fees of any credit card company.

Related: The Top 9 Most Exclusive Black Cards You Don’t Know About

How Amex and Discover Operate

Amex makes its money on annual fees charged to cardholders and swipe fees charged to merchants, which is why they charge a high processing fee compared to Visa or MasterCard. The added revenue for cards like Amex and Discover goes into investing in features like premium rewards and other perks for cardholders.

Amex and Discover work differently than MasterCard or Visa: Amex and Discover market and issue their cards directly to the cardholder. Amex operates on what it calls a “closed loop network” and provides the full range of credit card services, serving in four roles:

  • Card issuer
  • Merchant
  • Transaction processor
  • Network

The closed loop network — the same strategy that Discover uses and that MasterCard and Visa do not use — allows Amex to see the payment transactions from both the perspective of the cardholder and the merchant, and craft more targeted offers to cardholders. Amex places emphasis on customer service, points and rewards. And Discover is notably generous in its return policy: If a cardholder is unhappy about his purchase, Discover will refund the purchase price up to $500 on eligible items if the original store will not accept the return within 90 days of purchase.

Compared with MasterCard and Visa, Amex focuses on more affluent consumers in its business model, according to Justin Warren of ChargeSmart, an online bill payment service. Merchants benefit from accepting Amex because these affluent consumers are more likely to spend more and give those merchants repeat business. 

Read: Best Loyalty Rewards Programs for Your Wallet

How Merchant Acceptance Works for Visa and MasterCard

Unlike Amex and Discover, Visa and MasterCard do not issue credit cards. That’s because both Visa and MasterCard are credit card processors, not card issuers; Visa and MasterCard operate as financial middlemen, providing the technology and the networks to power transactions.

“Visa and MasterCard make their money from processing transactions,” said Miranda Marquit, a financial journalist and money expert. “They receive money each time you swipe your card, and [might] also receive other fees from merchants that use their payment processing networks to accept credit cards.”

Visa and MasterCard transactions involve a total of three different parties:

  • An acquiring financial institution: the retailer’s bank
  • An issuing financial institution: the bank that issued your credit card and provides you with a line of credit — for example, Chase or Citibank
  • The network between both financial institutions: Visa or MasterCard

Every time you use your Visa or MasterCard credit card, the charge is submitted through the retailer’s bank or financial institution, which must request approval from your financial institution — the card issuer — to verify that you have not reached your credit limit. Visa and MasterCard also reach a wider audience than Amex and Discover by working with a variety of banks that offer Visa- and MasterCard-branded debit cards for checking accounts.

Spending Abroad With Your Discover or Amex Card

Although they’re not as popular with retailers as MasterCard and Visa cards, Amex and Discover cards are now widely accepted within the U.S., Canada and Mexico. Amex and Discover are becoming increasingly accepted in other countries, too, but cardholders might still find that fewer retailers accept these two forms of payment compared with MasterCard and Visa. If you’re traveling beyond these three countries, check with the Amex and Discover credit card websites or customer service representatives to see where your card will be accepted abroad.

Read: Best Travel Rewards Credit Card Offers of 2016

Choosing and Charging Wisely With Amex or Discover

Amex and Discover cards are now more widely accepted than they ever have been, yet some merchants still refuse to accept these credit cards because of their higher processing fees. Amex has also traditionally charged an annual fee as part of its strategy to target more affluent customers, which keeps some potential cardholders away. The annual fee can be a significant cost: The Amex Centurion card charges an annual membership fee.

Still, Amex and Discover could be the right options for credit card users: Amex prioritizes customer service, points and rewards — plus perks like free concierge services and travel rewards that could make the fees worthwhile for the right customer — for their cardholders, and Discover offers customers a hard-to-beat refund guarantee and compelling cash-back rewards.

If you have an Amex or Discover card in your wallet, enjoy your perks. But when using credit cards to make payments online or in-store, it’s best to be prepared: Have your Visa or MasterCard on you just in case, or you might be stuck with an unusable credit card, and a bill you’re not able to pay — even if you can afford to.

Ruth Sarreal contributed to the reporting for this article.

  • SuperKirby

    Nice article!

  • karmicbonds

    Amex and Discover might be good for consumer for bad for merchants

  • ישי..

    I just don’t get what good comes to an amex holder.
    I just left them and took mastercard, so much easier.

    • Andrea Burke

      They have a lot of “points” programs…flier miles, cash back. That’s the only difference I really know and advantage to having one.

      • Aklilu Kassa

        They have more perks than that: they empower consumers with massive credit limits which boosts your credit score. They also protect you from credit fraud.

        American Express is also one of the oldest banks in America – very American.

        I can take you to water, but cannot make you drink.

        • Andrea Burke

          Good info thanks for the input! I will look into this more 🙂



  • David

    AMEX and Discover offer such great perks. I keep getting offers in the mail to open a new line of credit, but then balk cause I know they’re not accepted everywhere. At least now I know why!

    • Jon Marshall

      Actually studies show that Amex is now accepted at more merchants than ever before. Perception is not always reality.

  • chicagoCabbie

    I don’t shop where AMEX isn’t
    taken ………..I think the REAL
    reason SOME merchants don’t accept AMEX is they don’t want to give the
    customer the POWER

    Amex gives to the customer.. If there is a problem with a purchase Amex will

    “pull” the money back from the merchant until the
    problem is resolved. Merchants don’t do anything else until its resolved
    because the money is gone.. With Visa & MC it takes months and a thousand
    phone calls and if in the end you want your money back it may not happen……With
    AMEX you already have your money back and it only took 1 phone call to Amex and
    they pulled it back while you were on that phone call………

    • Grimp Mann

      You’re a scumbag

      • zaid toma

        Yes ….serious scumbag

    • Jon Marshall

      Well said

    • Mack Doggs

      No, it’s just fees. Trust me, I’m a merchant. Amex charges me 3% on all sales. Visa is only 1.3%. Taking Amex is like throwing money away.

  • no.

    I work in a retail store and have heard from the owner that a lot of customers will call Amex to get a refund from the purchase “they disliked”. It started happening too often so he stopped accepting Amex. Some people can ruin it for others.