American Express Company (American Express) operates as a globally integrated payments company.
The company is providing customers with access to products, insights and experiences that enrich lives and build business success. The company is a leader in providing credit and charge cards to consumers, small businesses, mid-sized companies and large corporations around the world. American Express cards issued by the company, as well as by third-party banks and other institutions on the American E...
American Express Company (American Express) operates as a globally integrated payments company.
The company is providing customers with access to products, insights and experiences that enrich lives and build business success. The company is a leader in providing credit and charge cards to consumers, small businesses, mid-sized companies and large corporations around the world. American Express cards issued by the company, as well as by third-party banks and other institutions on the American Express network, can be used by Card Members to charge purchases at the millions of merchants around the world that accept cards bearing the company’s logo.
The company’s various products and services are offered globally to diverse customer groups through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party service providers and business partners, direct mail, telephone, in-house sales teams and direct response advertising.
American Express and its principal operating subsidiary, American Express Travel Related Services Company, Inc. (TRS), are bank holding companies under the Bank Holding Company Act of 1956, as amended (the BHC Act), subject to supervision and examination by the Board of Governors of the Federal Reserve System (the Federal Reserve).
The company principally engages in businesses comprising four reportable operating segments: U.S. Consumer Services (USCS), Commercial Services (CS), International Card Services (ICS), and Global Merchant and Network Services (GMNS). Corporate functions and certain other businesses are included in Corporate & Other. The company’s businesses function together to form its end-to-end integrated payments platform, which is a differentiator that underpins the company’s business model.
The company offers a broad array of products and services to consumers, small businesses, mid-sized companies, and large corporations. The company works with partners, such as Delta, Marriott, Hilton and British Airways to offer cobranded cards for consumers and small businesses; and with partners in many industries, including Delta, to offer benefits and rewards to Card Members.
Integrated Payments Platform and Technology
Through the company’s general-purpose card-issuing, merchant-acquiring and card network businesses, the company is able to connect participants and provide differentiated value across the commerce path. The company maintains direct relationships with Card Members (as a card issuer) and merchants (as an acquirer), which provides the company with direct access to information at both ends of the card transaction, distinguishing the company’s integrated payments platform from the bankcard networks. Through contractual relationships, the company also obtains information from third-party card issuers, merchant acquirers, aggregators and processors with whom the company does business.
The company’s integrated payments platform and the systems and infrastructure that underlie it allow the company to analyze information on Card Member spending, build models and use analytical tools to help the company underwrite risk, reduce fraud and provide targeted marketing and other information services for merchants and partners and special offers and services to Card Members, all while maintaining the company’s commitment to respect Card Member preferences and protect Card Member and merchant data in compliance with applicable policies and legal requirements. The company also leverages technology to allow for faster introduction and greater differentiation of products, as well as to develop and improve the company’s service capabilities to continue to deliver a high-quality customer experience.
Card Issuing Businesses
The company’s global proprietary card-issuing businesses are conducted through the company’s USCS, CS and ICS reportable operating segments. The company offers a broad set of card products, rewards and services to a diverse consumer and commercial customer base, in the United States and internationally. The company acquires and retains high-spending, engaged and creditworthy Card Members by:
Designing innovative credit, charge and debit card products and payment and lending solutions that appeal to the company’s target customer base and meet their spending and borrowing needs.
Using incentives to drive spending on the company’s various card products and increase customer engagement, including the company’s Membership Rewards and Amex Offers programs, cash-back reward features, interest rates offered on deposits and participation in loyalty programs sponsored by the company’s cobrand and other partners.
Providing digital and mobile services and an array of benefits and experiences across card products, such as lounge access, dining experiences and other travel and lifestyle benefits.
Creating world-class service experiences by delivering exceptional customer care.
Developing a wide range of partner relationships, including with other corporations and institutions that sponsor certain of the company’s cards under cobrand arrangements and provide benefits and services to the company’s Card Members.
The company focuses on broadening the appeal of its products to attract new customers, particularly Millennial and Gen Z customers, as well as expanding the company’s position with small and mid-sized enterprise (SME) customers by providing more ways to help them manage and grow their businesses. The company has a number of products that complement its card products, such as the company’s business checking and consumer rewards checking account products, the company’s business-to-business (B2B) payment products and other non-card payment and financing products, the company’s Business Blueprint digital cash flow management hub, the company’s Resy restaurant platform and other new digital capabilities. Additionally, the company is focused on driving growth and efficiencies internationally, including a greater focus on local priorities in international jurisdictions. Jurisdictions that represent a significant portion of the company’s billed business outside of the United States include the United Kingdom (U.K.), the European Union (EU), Australia, Japan, Canada, and Mexico.
As of December 31, 2023, the company had 80.2 million proprietary cards-in-force worldwide.
Merchant Acquiring Business
The company’s GMNS reportable operating segment builds and manages relationships with millions of merchants around the world that choose to accept American Express cards. This includes signing new merchants to accept the company’s cards, agreeing on the discount rate (a fee charged to the merchant for accepting the company’s cards) and handling servicing for merchants. The company also builds and maintains relationships with merchant acquirers, aggregators and processors to manage aspects of the company’s merchant services business. For example, through the company’s OptBlue merchant-acquiring program, third-party processors contract directly with small merchants for card acceptance on the company’s network and determine merchant pricing. The company continues to grow merchant acceptance of American Express cards around the world and work with merchant partners so that the company’s Card Members are warmly welcomed and encouraged to spend in the millions of places where their American Express cards are accepted. The company also seeks to drive greater usage of the American Express network by deepening merchant engagement and increasing Card Member awareness through initiatives, such as the company’s Shop Small campaigns and expanding the company’s payment options, such as through debit and B2B capabilities.
GMNS also provides fraud-prevention tools, marketing solutions, data analytics and other programs and services to merchants and other partners that leverage the capabilities of the company’s integrated payments platform.
Card Network Business
The company operates a payments network through which the company establishes and maintains relationships with third-party banks and other institutions in approximately 110 countries and territories, licensing the American Express brand and extending the reach of the company’s global network. These network partners are licensed to issue local currency American Express-branded cards in their countries and/or serve as the merchant acquirer for local merchants on the company’s network.
As of December 31, 2023, the company had 61.0 million cards-in-force issued by third parties worldwide.
Diverse Customer Base and Global Footprint
The company’s broad and diverse customer base spans consumers, small businesses, mid-sized companies, and large corporations around the world.
Partners and Relationships
The company’s integrated payments platform allows the company to work with a range of business partners, and the company’s partners in return help drive the scale and relevance of the platform.
There are many examples of how the company works with partners, including: issuing cards under cobrand arrangements with other corporations and institutions (e.g., Delta Air Lines (Delta), Marriott International, Hilton Worldwide Holdings and British Airways); offering innovative ways for the company’s Card Members to earn and use points with the company’s merchants (e.g., Pay with Points at Amazon.com); providing greater value to the company’s Card Members (e.g., Amex Offers and statement credits for purchases with partners); expanding merchant acceptance with third-party acquirers and processors (e.g., OptBlue partners); operating through joint ventures in certain jurisdictions (e.g., in China, the Middle East and Switzerland); developing new capabilities and features with its digital partners (e.g., PayPal and i2c); integrating into the supplier payment processes of the company’s business customers (e.g., BILL and Extend); and enhancing the company’s travel benefits and services (e.g., Fine Hotels and Resorts). The company also has a significant ownership position in, and extensive commercial arrangements with, Global Business Travel Group, Inc. (GBTG), which provides business travel-related services.
Delta is the company’s largest strategic partner. The company’s relationships with Delta are significant and represents an important source of value for the company’s Card Members. The company issues cards under cobrand arrangements with Delta and the Delta cobrand portfolio represented approximately 10 percent of worldwide network volumes and approximately 21 percent of worldwide Card Member loans as of December 31, 2023. The Delta cobrand portfolio generates fee revenue and interest income from Card Members and discount revenue from Delta and other merchants for spending on Delta cobrand cards. The Delta cobrand agreement runs through the end of 2029 and the company expects to continue to make significant investments in this partnership. Among other things, Delta is also a key participant in the company’s Membership Rewards program, provides travel-related benefits and services, including airport lounge access for certain American Express Card Members, accepts American Express cards as a merchant and is a corporate payments customer.
Spend-Centric Model and Revenue Mix
The company’s ‘spend-centric’ business model focuses on generating revenues primarily by driving spending on the company’s cards and secondarily through finance charges and fees. Spending on the company’s cards, which is higher on average on a per-card basis versus the company’s network competitors, offers superior value to merchants in the form of loyal customers and larger transactions. Because of the revenues generated from having high-spending Card Members and the annual card fees the company charges on many of its products, the company is able to invest in attractive rewards and other benefits for Card Members, as well as targeted marketing and other programs and investments for merchants. This creates incentives for Card Members to spend more on their cards and positively differentiates American Express cards.
The company’s spend-centric model gives the company the ability to provide differentiated value to Card Members, merchants and business partners.
The American Express Brand and Service Excellence
The company’s brand and its attributes—trust, security and service—are key assets. The company invests heavily in managing, marketing, promoting and protecting the company’s brand, including through the delivery of the company’s products and services in a manner consistent with the company’s brand promise. The American Express brand is ranked among the most valuable brands in the world.
The company’s customer care professionals, travel consultants and partners treat servicing interactions as an opportunity to bring the brand to life for the company’s customers, add meaningful value and deepen relationships.
Business Strategies
The company’s four strategic imperatives are as follows:
First, the company intends to expand its leadership in the premium consumer space by continuing to deliver membership benefits that span the company’s customers’ everyday spending, borrowing, travel and lifestyle needs, expanding the company’s roster of business partners around the globe and developing a range of experiences that attract high-spending customers.
Second, the company seeks to build on its strong position in commercial payments by evolving the company’s card value propositions, further differentiating the company’s corporate card and accounts payable expense management solutions and designing innovative products and features, including financing, banking and payment solutions for the company’s business customers.
Third, the company is focused on strengthening its global, integrated network by continuing to increase merchant acceptance, providing merchants with fraud protection services, marketing insights and connections to higher-spending Card Members and working with the company’s network partners to offer expanded products and services.
Finally, the company wants to continue to build on its unique global position, seeking ways to use the company’s differentiated business model and global presence as the company progress against the company’s other strategic imperatives.
The company also has an Environmental, Social and Governance (ESG) strategy that focuses on three pillars. The Building Financial Confidence pillar seeks to provide responsible, secure and transparent products and services to help people and businesses build financial resilience. The Advancing Climate Solutions pillar focuses on enhancing the company’s operations and capabilities to meet customer and community needs in the transition to a low-carbon future. Finally, the Promoting Diversity, Equity and Inclusion (DE&I) pillar supports a diverse, equitable and inclusive workforce, marketplace and society.
Supervision and Regulation
American Express entities are subject to banking regulation in the United States and in certain jurisdictions internationally. The U.S. federal and state banking laws, regulations and policies extensively regulate the company, TRS and the company’s U.S. bank subsidiary, American Express National Bank (AENB).
Both the company and TRS are subject to comprehensive consolidated supervision, regulation and examination by the Federal Reserve and AENB is supervised, regulated and examined by the Office of the Comptroller of the Currency (OCC). The company and its subsidiaries are also subject to the rulemaking, enforcement and examination authority of the Consumer Financial Protection Bureau (CFPB).
In order to remain eligible for financial holding company status, the company must meet certain eligibility requirements. Those requirements include that each of the company and AENB must be ‘well capitalized’ and ‘well managed,’ and AENB must have received at least a ‘satisfactory’ rating on its most recent assessment under the Community Reinvestment Act of 1977 (the CRA).
In addition, the company is subject to banking laws and regulations that limit the company’s investments and acquisitions and, in some cases, subject them to the prior review and approval of the company’s regulators, including the Federal Reserve and the OCC.
AENB accepts deposits that are insured by the FDIC up to the applicable limits. AENB is subject to the CRA, which imposes affirmative, ongoing obligations on depository institutions to meet the credit needs of their local communities, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of the institution.
In the United States, the company’s marketing, sale and servicing of consumer financial products and the company’s compliance with certain federal consumer financial laws are supervised and examined by the CFPB, which has broad rulemaking and enforcement authority over providers of credit, savings and payment services and products, and authority to prevent ‘unfair, deceptive or abusive’ acts or practices.
The company is also regulated in the United States under the ‘money transmitter’ or ‘sale of check’ laws in effect in most states. In addition, the company is required by the laws of many states to comply with unclaimed and abandoned property laws, under which the company must pay to states the face amount of any Travelers Cheque or prepaid card that is uncashed or unredeemed after a period of time depending on the type of product. Additionally, the company is regulated under insurance laws in the United States and other countries where the company offers insurance services.
In the United States, certain of the company’s businesses are subject to the privacy, disclosure and safeguarding provisions of the Gramm-Leach-Bliley Act (GLBA) and its implementing regulations and guidance. The company also has expanded privacy-related obligations with respect to California residents who are not covered by GLBA, pursuant to the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020.
The EU General Data Protection Regulation (GDPR) and the equivalent U.K. GDPR impose legal and compliance obligations on companies that process personal data of individuals in the EU and U.K., irrespective of the geographical location of the company, with the potential for significant fines for non-compliance (up to 4 percent of total annual worldwide revenue). These laws include, among other things, a requirement for prompt notice of data breaches, in certain circumstances, to affected individuals and supervisory authorities and restrictions on the cross-border transfers of EU or UK personal data. The company relies on a variety of compliant transfer mechanisms to transfer this personal data, including the use of binding corporate rules and standard contractual clauses.
The company is subject to significant supervision and regulation, and an increasingly stringent enforcement environment, with respect to compliance with anti-money laundering (AML), countering the financing of terrorism (CFT), sanctions and anti-corruption laws and regulations.
The company is subject to a significant number of AML/CFT laws and regulations globally.
The company is subject to complex anti-corruption laws and regulations, including the U.S. Foreign Corrupt Practices Act (the FCPA), the UK Bribery Act and other laws that prohibit the making or offering of improper payments. The FCPA also requires the company to strictly comply with certain accounting and internal controls standards.
The company’s compensation practices are subject to oversight by the Federal Reserve and the OCC.
Competition
The company’s global card network competes in the global payments industry with other card networks, including among others, China UnionPay, Visa, Mastercard, JCB, Discover and Diners Club International (which is owned by Discover).
History
American Express Company was founded in 1850.
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