The Merchant Who Can Refuse the CardNarrow moat

American Express (AXP) — moat facet

A merchant who surcharges or steers competes with American Express for the fee without refusing the card, and the courts may decide how far it can go.

The merchant is American Express's customer and, at the margin, its competitor for the economics of each sale. A merchant who takes the card pays about 2.24% of the purchase1; one who refuses it, surcharges it or steers customers to another card keeps some of that.

Merchant locations accepting Amex (millions)about 170Start of 2026, about190+September 2026American Express release, 28 September 2026; start of year calculated as 190 less 20
About 20 million places added in nine months.

Amex has seen all three. Surcharging is spreading: "In jurisdictions allowing surcharging, we have seen an increase in merchant surcharging on American Express cards, particularly in certain merchant categories"2. Merchants are suing over the rules that stop them steering customers to cheaper cards: in a case filed in September 2024, plaintiffs allege "that the anti-steering and non-discrimination provisions in our merchant agreements violate federal antitrust law"3.

And a merchant can walk away. The clearest case is Costco, which the Major Clients page Costco: What Losing a Partner Looks Like covers as a lost cobrand; this app's Costco page, Visa Is the Only Credit Card That Works, covers the merchant side. In 2015 Amex said only 1% of its worldwide billed business came from other Amex cards used at Costco warehouses4, which shows how little a large merchant's acceptance can matter when the card is not the store's own.

Against this, Amex has spent years making refusal rarer. Acceptance passed 190 million merchant locations in September 2026, about 20 million more than at the start of the year5. A merchant surrounded by Amex-accepting competitors has less reason to refuse.

The anti-steering cases are the dated risk. If a court held those provisions unlawful, merchants in the United States could steer customers away from Amex at the till, which would test the premium in the country that produces most of the profit.

Not every legal challenge has gone against Amex. In August 2025 a jury found for the company in the Moskowitz consumer class action except on one Illinois claim, with damages of $12.5 million, and a settlement is pending6.

The rate is where every one of these contests shows up. Discount revenue was 2.24% of billed business in 20257; a U.S. ruling against the anti-steering provisions followed by a fall in that rate would mean the merchant had found a way to compete for the fee without refusing the card.

Moat trajectory: Narrowing

Surcharging increasing where allowed; anti-steering provisions challenged in U.S. court.

The number that tests this moat
Reported
Merchant locations accepting the card
More than 190 million (Sept 2026), about 20 million added in 2026

The spread of acceptance that makes refusal rare; a stall while surcharging spread would leave the fee exposed.

Source: American Express release, 190 million merchant locations ↗
References
  1. ReportedA merchant who takes the card pays about 2.24% of the purchase; one who refuses it, surcharges it or steers customers to another card keeps some of that.
    American Express Form 10-K for fiscal 2025 - Item 1A risk factors, competition and regulation. — FY2025 · publ. 6 February 2026 · source ↗
  2. ReportedSurcharging is spreading: "In jurisdictions allowing surcharging, we have seen an increase in merchant surcharging on American Express cards, particularly in certain merchant categories".
    American Express Form 10-K for fiscal 2025 - Item 1A risk factors, competition and regulation. — FY2025 · publ. 6 February 2026 · source ↗
  3. ReportedMerchants are suing over the rules that stop them steering customers to cheaper cards: in a case filed in September 2024, plaintiffs allege "that the anti-steering and non-discrimination provisions in our merchant agreements violate federal antitrust law".
    American Express Form 10-K for fiscal 2025 - Item 1A risk factors, competition and regulation. — FY2025 · publ. 6 February 2026 · source ↗
  4. ReportedIn 2015 Amex said only 1% of its worldwide billed business came from other Amex cards used at Costco warehouses, which shows how little a large merchant's acceptance can matter when the card is not the store's own.
    American Express Form 10-K for fiscal 2015 - the end of the Costco relationship and its share of billed business, loans and cards; the three-party network; average discount rates 2013-2015. — FY2015 · publ. February 2016 · source ↗
  5. ReportedAcceptance passed 190 million merchant locations in September 2026, about 20 million more than at the start of the year.
    American Express release via Business Wire, 28 September 2026 - accepted at more than 190 million merchant locations; locations outside the United States more than doubled in four years. — September 2026 · publ. 28 September 2026 · source ↗
  6. ReportedIn August 2025 a jury found for the company in the Moskowitz consumer class action except on one Illinois claim, with damages of $12.5 million, and a settlement is pending.
    American Express Form 10-K for fiscal 2025 - Item 1A risk factors, competition and regulation. — FY2025 · publ. 6 February 2026 · source ↗
  7. ReportedDiscount revenue was 2.24% of billed business in 2025; a U.S. ruling against the anti-steering provisions followed by a fall in that rate would mean the merchant had found a way to compete for the fee without refusing the card.
    American Express Form 10-K for fiscal 2025 - Item 1A risk factors, competition and regulation. — FY2025 · publ. 6 February 2026 · source ↗
Sources
Generated September 28, 2026