American Express

American Express (Amex) is a global payment card network that operates as both an issuer and acquirer, maintaining proprietary merchant acceptance standards, dispute resolution procedures, and fraud threshold policies that govern how payment service providers (PSPs) and acquirers underwrite and monitor merchants.

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Unlike open-loop networks (Visa and Mastercard), American Express retains control over both sides of the transaction, which allows it to enforce stricter merchant onboarding requirements and ongoing compliance obligations.

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Why American Express Compliance is a Challenge

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Managing American Express merchant relationships introduces specific operational and compliance complexities:

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• Dual Role Creates Stricter Standards: Because Amex acts as both issuer and acquirer in most markets, it maintains tighter control over merchant acceptance criteria, dispute timelines, and fraud thresholds compared to other card networks. Acquirers and PSPs must align their merchant underwriting and monitoring processes with these proprietary rules.

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• Higher Chargeback and Fraud Sensitivity: American Express enforces lower tolerance thresholds for chargeback rates and fraud indicators. A merchant flagged by Amex may face immediate action, including termination of processing rights, even if the same merchant remains compliant under Visa or Mastercard programs.

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• Opaque Policy Updates: Amex policy changes are not always communicated through public bulletins in the same manner as other networks. Risk teams must track updates through acquirer communications, direct Amex relationships, or industry channels, which increases the risk of missing critical compliance shifts.

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• Limited Transparency on Merchant Monitoring Programs: While Visa and Mastercard publish detailed monitoring program structures (such as Mastercard's Merchant Monitoring Program), American Express provides less public documentation on its internal merchant oversight mechanisms, making it harder for acquirers to anticipate enforcement actions.

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How to Manage American Express Compliance

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Risk teams at PSPs, acquirers, and marketplaces should implement these controls to maintain Amex compliance:

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• Separate Amex Underwriting Logic: Build dedicated underwriting workflows for American Express merchants that reflect its stricter standards. This includes enhanced validation of business models, transaction volume expectations, and dispute history. Merchants approved for Visa or Mastercard processing may not automatically meet Amex criteria.

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• ‍Monitor Chargeback Rates at Network Level: Track chargeback ratios separately for each card network. A merchant may be compliant with Visa's dispute thresholds but exceed Amex's internal limits. Set alerts at or below 0.5% for Amex-specific chargebacks to allow time for corrective action before network intervention.

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• ‍Establish Direct Communication Channels with Amex: Maintain a relationship with American Express representatives who can provide advance notice of policy updates, dispute trends, or merchant-specific concerns. Acquirers without direct Amex relationships should ensure their sponsoring bank or processor has this visibility.

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• ‍Incorporate Amex-Specific Data into Monitoring Systems: Configure merchant monitoring platforms to flag Amex disputes, retrieval requests, and fraud indicators separately from other networks. This allows risk teams to respond to Amex concerns before they escalate into termination notices.

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• ‍Review Merchant Acceptance Policies Quarterly: American Express updates its merchant acceptance guidelines periodically. Risk teams should review these policies at least quarterly and update internal underwriting rules accordingly. Pay particular attention to prohibited business categories, which may differ from those restricted by Visa or Mastercard. These categories are often identified using Merchant Category Codes (MCCs), the four-digit classification system that card networks use to categorize merchant business types.

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Strategic Context: Why Amex Compliance Matters

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Failure to meet American Express standards can result in financial penalties, loss of processing rights for the entire merchant portfolio, or termination of the acquirer's relationship with Amex. These consequences extend beyond individual merchant accounts.

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For PSPs and acquirers, maintaining Amex compliance is not only about protecting individual merchant relationships but also about preserving network access. American Express can revoke an acquirer's ability to process Amex transactions if systemic non-compliance is identified, which affects all merchants regardless of their individual risk profiles.

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Additionally, merchants increasingly expect multi-network acceptance. A PSP that cannot support American Express processing may lose competitive positioning, particularly in industries where Amex cardholders represent a significant customer segment (such as travel, luxury goods, and B2B services).

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Example: Amex Chargeback Threshold Enforcement in Action

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A mid-sized ecommerce merchant processing $500,000 per month in card transactions maintained a chargeback rate of 0.8% across all networks. While this rate fell within acceptable thresholds for Visa and Mastercard, American Express flagged the merchant for exceeding its internal limits.

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The acquirer received a notice from Amex requiring immediate corrective action. The risk team implemented enhanced fraud screening rules specific to Amex transactions, reducing the Amex-specific chargeback rate to 0.4% within 60 days. Without network-level monitoring, the acquirer would not have detected the issue until Amex initiated termination proceedings.

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This scenario illustrates why acquirers must monitor card network performance independently, rather than relying on aggregate metrics.

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