Hello...I'm new to the board. I found this resource while looking for information on a new policy that's just been explained to me by two Amex representatives. Apparently as of Sept. 1, 2003, American Express is *keeping* the discount amount on all credits. In other words, if someone rings up $3K in charges with a merchant on an Amex card, Amex takes out $100 or so (2-3%) as the discount rate and places $2900 in your bank account. Then, if the customer returns the merchandise and you issue them a credit, Amex doesn't collect the $2900 they initially paid you (that's what they used to do). Now they collect $3K from you, effectively collecting money that you never made in the first place!

Does anyone else know about this and does it affect you? I'm awaiting a fax from Amex describing this new policy. I can't find any other information about it anywhere. I understand they take a small hit for resources when there's a charge/credit cycle - I'd pay a small fee for that, but the entire discount amount is ridiculous, as it penalizes large transactions.

Greg

WOW. I had not heard that. Let me check to see if anyone in our merchant account division is familiar with this policy.

Two folks I've told about it immediately asked me "what do Visa/MC do?" - I don't know, I'll have to investigate...but by your reaction I'll take it this is not a standard industry policy (yet). As you know, Amex handles deposits to merchant accounts differently (at least for me and one other merchant I know) - they deposit the settlement amount to your merchant bank account less the discount amount. Visa/MC deposit the gross amount and then take the discount rate as sum at the end of the month, so I'll have to go back and review my accounts to see if they refunded the discount rates on a credit I recently ran off a Visa card.

I'm still waiting for a fax from Amex with the "new language", but I have had two representatives in their merchant division tell me this disturbing news. As soon as I get it (I'll keep calling to make sure I do), I will provide the exact language. I don't know if it applies to all transactions, internet/mail only (i.e., card-not-present), etc.

I wonder if it'd be possible to have this policy changed with a worldwide Amex boycott by merchants. (LOL - I know - but it's always the first thing you think of when they pull something like this). OTOH, I can see it not making a huge difference for merchants with small ticket sizes. Our avg. ticket is $3K though, so we pay a *lot* for the "privilege" of charging a customer's card. *sigh* Needless to say, we won't be accepting the Amex card anymore.

Greg

Greg.

Let us know when you get that fax from Amex. If this is the case I'm sure your not the only one who would be discontinuing thier acceptance.

I swear merchants get no protection for processing cards. All protection is provided for the cardholder. I am sure most of the transactions reported are false reports as some people know all they have to do is dispute the charge to get their money back, because online merchants cannot get a signature from the buyer and cardholders can always say they did not authorize the charge.

It is such a pain, because even if you had all packages signature required (which would tick off some customers) the card holder isn't necessarily going to be the signer of the package. Then your in the same boat! One thing someone else mentioned was to get a photo copy of the card front/back faxed with a signature. BUT then it could have been scanned and modified in a photo editor to make the card and signature look correct even if it is a fraudulent card number!

Here's a idea... when the package is opened have a device take a picture and email it to you via a wireless internet connection! Hey, probably cost you only $500 per package but it would prevent fraud! LOL

Imagine this, 6pm and still no fax. I was out of the office all day after I posted my last message, but I'll be calling again tomorrow. If anyone else wants to call and check, just call the Amex merchant number on your statement and ask them if there's a new policy about handling the discount amount on credits. I'll keep pestering them tomorrow whenever I have a chance. They swear up and down they sent us something in August explaining this, but I haven't seen it yet. If this new policy is true, I suppose the Wall St. Journal (among others) might be interested in this little change. Imagine the dollars Amex is going to rake in for this.

-Greg

I really never paid that close attention to that but from the few charge backs I receive I believe MC and Visa take the full amount back.

Dani, chargebacks are different from credits...I could see such a policy on chargebacks (for which there's usually an additional fee of $15) - esp. with card-not-present transactions since they are sort of reprimanding the merchant for accepting a fraudulent transaction. But credits shouldn't be treated as harshly IMHO.

Got it: this is an "Amendment to the American Express Card Acceptance Agreement". Bullet #6 in this pamphlet says:

6. Additional terms with regard to Credits:

You agree to issue Credits only for Charges made with the Card. We will deduct the _full_ (the word is underlined) amount of the Credit from our payments to you or you must pay us promptly upon receipt of our invoice.


The old language in my "Terms and Conditions for American Express Card Acceptance", under "Credits", says:

"...We will deduct the amount of the Credit, minus the applicable Discount, from your payment."

There you have it people - this is pretty significant...

Greg

Yes. Very signifigant. How long has this been in affect?

18 days. Went into effect on 9/1/03. Talk about burying this deep in a pile of legalese that I bet less than 1% of merchants actually have time to read...

-Greg

Doesn't sound like this affects anyone else - I guess we're a relatively isolated case. Just be careful from now on, when you take an Amex card, you have to pay the discount rate for the total charge regardless of whether you complete the sale or not.

Greg

I do believe that Mastercard and Visa do the same (or at least our processor?? does) - this is why we are exchange only - no refunds. Nancy