Navigating American Express Merchant Regulations: What Every Merchant Must Know

Introduction

Accepting American Express (AmEx) cards gives your business access to a premium customer base and often higher spending power. But along with these benefits come responsibilities. American Express requires merchants to follow specific rules outlined in its Merchant Regulations, which govern how you accept, process, and manage AmEx transactions.

Failure to comply can result in chargebacks, fines, or even termination of your merchant agreement. In this guide, we break down the essentials of AmEx’s merchant regulations and share best practices to help you stay compliant.

What Are the Merchant Regulations?

The American Express Merchant Regulations are policies and procedures that all merchants must follow. They include:

• Global policies (apply to all AmEx merchants worldwide)

• Country-specific rules (apply in the U.S. or other regions, overriding global policies when conflicts exist)

American Express updates these rules twice per year — in April and October — with the potential for interim updates. By accepting AmEx, you agree to comply with these standards.

Key Areas Merchants Must Understand

1. Prohibited Uses & Transaction Integrity

• Only process legitimate sales of goods or services (or charitable donations).

• Do not split a single sale into multiple charges to bypass authorization limits.

• Never process transactions on behalf of another business without authorization.

2. Technical Compliance

• Merchants must follow AmEx’s technical specifications for transaction formatting, encryption, and reporting.

• Third-party processors and integrations must also comply.

3. Data Security

• Maintain strong PCI compliance, encryption, and breach protocols.

• Non-compliance can trigger penalties or indemnity obligations.

4. Disputes & Chargebacks

• Follow required timelines and documentation standards when responding to disputes.

• Refunds and credits must align exactly with original transactions.

5. Fees & Deductions

• Merchants pay a Discount Rate (AmEx’s merchant fee), along with potential assessments, chargebacks, or reserves.

• AmEx may adjust fees or require a reserve for high-risk accounts.

6. Recurring Billing & Subscriptions

• Customers must have a clear, simple way to cancel recurring payments.

• Stop billing immediately if a customer cancels their card or revokes consent.

7. U.S. Tax & Reporting Obligations

• Under IRS Section 6050W, AmEx must report U.S. merchants’ gross payment card transactions.

• Merchants may need to certify their U.S. or non-U.S. business status.

Risks of Non-Compliance

Ignoring AmEx merchant regulations can create serious challenges:

• Financial penalties from chargebacks, fees, or fines.

• Operational disruption if AmEx suspends your merchant account.

• Reputation damage if disputes or data breaches affect customer trust.

• Legal/tax issues if IRS reporting obligations aren’t met.

Best Practices for Staying Compliant

1. Always use the latest regulations (check updates every April and October).

2. Invest in PCI-compliant systems with strong encryption and tokenization.

3. Simplify subscription cancellations for customers.

4. Keep transaction logs to defend against disputes or chargebacks.

5. Monitor chargeback ratios and act quickly if disputes rise.

6. Train your staff on AmEx rules for transactions, refunds, and disputes.

7. Consult compliance experts if you operate across borders or high-risk industries.

Real-World Example

Scenario: You run a subscription-based service. A customer cancels their AmEx card but your system continues billing them.

Result: The customer disputes the charges. Under AmEx rules, recurring billing must stop immediately when the card or consent is canceled. You risk a chargeback, fees, and regulatory non-compliance.

Solution: Build automated cancellation workflows that halt billing instantly when a customer withdraws consent.

Conclusion

The American Express Merchant Regulations are more than fine print — they are the foundation of your merchant relationship with AmEx. By staying compliant, you protect your business from financial loss, maintain customer trust, and secure your ability to continue accepting AmEx cards.

Staying proactive with data security, dispute handling, and clear customer policies ensures smoother operations and fewer surprises.

At Throw Back Technologies, we help merchants implement best practices across all payment networks — including American Express — so your business can grow with confidence.

👉 Ready to strengthen your payment compliance strategy? Contact Throw Back Technologies today to get started.