Card Issuer Profile: American Express
Datamonitor, November 2008, Pages: 48
Present in over 100 countries around the world, American Express has perhaps the greatest global reach of any card company. This profile looks at both Amexs proprietary business and its Global Network Services division, providing an overview of both its current standing and outlook for the future.
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Key reasons to purchase this title
- Gain a detailed understanding of American Expresss strategy and approach in the card issuing space.
- Find out about the product innovations that American Express has introduced in its home market, the US.
- Learn how Datamonitor rates American Express in its unique scorecard exercise.
Overview 1
Catalyst 1
Summary 1
American Express 5
Key findings 5
Company overview 5
Background 5
Ownership and management 5
Bank of America board of directors 6
Employees 6
Management values 6
Company structure 7
American Express issues payment cards and acquires on its own network 7
Other issuers also issue cards on the American Express Network 8
A legal ruling in the US has left banks free to issue American Express cards in addition to those carrying the Visa and MasterCard brands 9
Geographic coverage 9
Strategic focus 10
American Express has an extremely strong brand 10
American Express operates a spend-centric business model in its consumer card business 11
The spend-centric business model is reflected in the high level of spend velocity on American Express cards 12
American Express bills more than its competitors but has lower outstanding balances 13
American Express has a different revenue mix from its competitors 14
The model depends on attracting high spending cardholders 15
American Express has also worked hard to maintain its position on the corporate side 16
On the large corporate side, American Express aims to provide a complete payments solution 16
For smaller businesses, American Express aims to position itself as a business partner 16
While American Express has traditionally focused on corporate and high net worth segments, this is changing 16
American Express has managed to avoid some of the pitfalls of moving to the mainstream 17
By operating its GNS arm, American Express diversifies its income 19
Card statistics 19
The value of transactions has grown consistently over the last five years 20
Cards statistics - rest of the world 22
Key financials 23
Profit and loss account 23
Balance sheet 25
Card product offering 26
On the consumer side, American Express focuses on quality service and providing cardholder value 26
The Membership Rewards program is central to the proposition 27
US consumer cards 28
International consumer cards 33
Commercial cards 35
American Express positions itself as a partner for SMEs 35
Corporate products are a mainstay of American Expresss product suite 37
Company outlook 38
American Express is less diversified than some of its competitors 38
In the current economic situation this may be no bad thing 38
One implication is that American Express is more reliant on funding 39
The GNS agreements provide some stability 39
The outlook for American Express is excellent in the longer term 39
Datamonitor Competitor Benchmark 40
Appendix 43
Definitions 43
Affinity card 43
Charge card 43
Co-branded card 43
Commercial card 43
Credit card 43
Premium cards 43
Private label card 44
Data relating to the graphics in this profile 44
Methodology 45
Further reading 46
Ask the analyst 46
Datamonitor consulting 47
Disclaimer 47
List of Tables
Table 1: American Express board of directors, 2008 6
Table 2: Value of American Express transactions in the US and overseas, 2005-07 21
Table 3: American Express statistics for Western Europe, 2007 22
Table 4: American Express statistics for Eastern Europe, 2006 23
Table 5: Revenue, operating cost and profit for American Express, 2004-07 25
Table 6: Scorecard logic, part one 41
Table 7: Scorecard logic, part two 42
Table 8: American Express - number of cards in issue 44
Table 9: Source of American Express revenue by business area 44
Table 10: American Express, balance sheet 2003-07 45
Table 11: Current relevant Datamonitor publications, 2008 46
Table 12: Future relevant Datamonitor publications, 2008 46
List of Figures
Figure 1: American Express comprises five main groups 7
Figure 2: American Express deals with business relationships as well as card issuance 9
Figure 3: American Express is present in more than 100 countries, 2008 10
Figure 4: American Express operates a spend-centric business model 12
Figure 5: American Express cards have a higher spend velocity than average, 2008 13
Figure 6: American Express bills more than any other global card issuer, 2007 14
Figure 7: American Express relies on fee income more than its competitors 15
Figure 8: On the whole, American Express has had lower write-off rates than its competitors, 2007-08 18
Figure 9: International operations have consistently accounted for around 40% of American Express cards in issue, 2003-07 20
Figure 10: Both the value of transaction and the value of transactions per card has grown, 2003-07 21
Figure 11: The US Card Services business now accounts for more than 50% of American Express revenue 24
Figure 12: American Express has exhibited growing profits, 2004-07 25
Figure 13: The American Express balance sheet shrunk considerably with the spin-off of Ameriprise in 2005 26
Figure 14: American Express spending on marketing, promotion, and card member rewards and services has more than doubled, 2001-07 27
Figure 15: The American Express Membership Rewards program has evolved since 1991 28
Figure 16: The Centurion Card is the top of the range American Express card 30
Figure 17: The American Express reward charge cards carry a range of benefits 31
Figure 18: American Express issues airline co-brands in the US 32
Figure 19: American Express also offers some reward cards aimed at the mass market 33
Figure 20: The American Express Nectar card 35
Figure 21: The Gold Card for small businesses, 2008 36
Figure 22: The Gold Card allows small businesses to receive discounts at a range of retailers 37
Figure 23: American Express - Datamonitor Competitor Scorecard 40
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