Also for people without a business background: Gross profit is what you charge (Hamburger at Burger King: $1). Net profit is the money you make from it after you pay costs. Burger King doesn't make $1 per burger, since they have to buy meat, ship it to their stores, have it prepared, etc. Losing 3 cents out of every dollar to AMEX instead of 2 cents to Visa/MC doesn't sound like much, but it's huge if you're only making 5 cents per burger.
That's why fast food didn't take credit cards for so long - I hear the CC companies inked deals at lower than normal rates for some huge-volume small-margin companies like Walmart, McDonald's, etc. The credit card companies want more widespread use of their cards so people start using them for everything. As a small merchant, you're not going to get that and it's yucky. It's part of the game right now unfortunately, but that AMEX additional 1% of GROSS is really huge in many industries.
Same with Sam's Club/Costco kind of places. Their margins are below what those credit cards charge out of the gate (except for Discover) but their order volume is so high that they were able to negotiate with at least Visa or Mastercard.
Actually, Costco does NOT take credit cards, with the only exception being Amex.
They will takea Visa/Mastercard Debit card, but you have to enter the PIN. Debit charges are processed at a lower rate, since they're essentially an interface for ACH, and having a valid 4-digit PIN entered (plus buying stuff on a membership card) supposedly eliminates fraud.
(I was there this past weekend to capitalize on their great deals on flat screens.)
That's why fast food didn't take credit cards for so long - I hear the CC companies inked deals at lower than normal rates for some huge-volume small-margin companies like Walmart, McDonald's, etc. The credit card companies want more widespread use of their cards so people start using them for everything. As a small merchant, you're not going to get that and it's yucky. It's part of the game right now unfortunately, but that AMEX additional 1% of GROSS is really huge in many industries.