If You're Using Your Amex in This Way, You Could Be Missing Out on Thousands of Points

We've all signed them -- the cardholder agreements for credit cards -- and have agreed, or at least checked the box, to obey the terms and conditions. Often, the contractual language is stuff we're familiar with, but every now and then, something sneaks in.

Like this from an American Express Membership Rewards agreement:

"You may not receive additional points if we receive inaccurate information or are otherwise unable to identify your purchase as eligible for an additional points category. For example, you may not receive additional points when:

• A merchant uses a third-party to sell their products or services; or
• A merchant uses a third-party to process or submit your transaction to us (e.g., using mobile or wireless card readers); or
• You choose to make a purchase using a third-party payment account or make a purchase using a mobile or digital wallet."

In plain language, this means if you're using your Amex card in a digital wallet, like Apple Pay, or you buy something where the merchant is using a third-party payment processor, like Stripe, there's a slight chance you won't earn bonus points or a higher percentage reward. The reason is a bit complicated and has to do with how merchants are categorized.

The problem is with codes

Whenever you make a purchase with your Amex card, the retailer will be classified with a code. Supermarkets have one code; gas stations have another. This helps Amex apply the correct rewards rate to your transaction.

For instance, if you have the American Express® Gold Card, then you can earn 4x points at restaurants, plus takeout and deliveries (up to $25,000 per calendar year). Terms apply. When you purchase something from a restaurant, a unique code will separate it from, say, buying a membership at a gym.

However efficient this system is, it's not foolproof. One big problem has been with third-party payment processors, like Square. These processors add a middle step between the merchant and the card issuer, and, unfortunately, do not always send Amex the correct code for certain purchases.

For example, you might get takeout from a local restaurant and put it on your Amex card. Technically, this should qualify for the Amex Gold Card's bonus rate. But if the restaurant is using Square, Toast, or Stripe, the processor could incorrectly send a different code, one that leaves you without bonus points earned.

The same issue can happen with digital wallets, like Apple Pay. Again, a third-party is stepping in (technically a fourth) and could incorrectly label your transaction. As another example, if you're using your Blue Cash Preferred® Card from American Express (eligible to earn 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases, terms apply) through Apple Pay to buy groceries at Whole Foods, the transaction may not be coded as "supermarket," thus earning you only 1% back.

How can you fix it?

To be fair, this isn't really Amex's fault. Rather, it's an issue with payment processors and digital wallets. And because it doesn't always happen, it can fly under the radar when it does.

The best solution is to monitor your transactions and make sure you're getting bonus points when you use digital wallets or pay through third-party processors. If you're not, call the number on the back of your Amex card, and the customer service will try to work it out with you.

Unfortunately, until Amex (and other issuers) fix this problem -- assuming a fix is possible -- there isn't another solution. Just keep track of your transactions and make sure you're not leaving thousands of points behind when you use your card to snag bonus rewards.