What revenue does American Express generate from merchants?

American Express generates revenue from merchants primarily through the discount rate charged on each transaction processed. This discount rate is a percentage of the transaction amount and is levied by American Express to cover the costs associated with processing payments and to generate profit. When a merchant accepts American Express cards, they agree to this fee structure, which is a crucial part of the business model for payment networks.

While other options reference different aspects of American Express’s revenue sources, they do not pertain specifically to the revenue generated from merchants. For instance, transaction fees from cardholders relate more to the cardholder's experience and usage of the card rather than the fees imposed on merchants. Similarly, interest income from unpaid balances and annual fees from credit cardholders pertain to the revenue generated from consumers, not from the merchant side of the transactions. Thus, the revenue derived from the discount rate is the direct financial relationship between American Express and the merchants.