How American Express make money?

American Express Inc is financial services provider with worldwide presence. Established in 1850,headquarter in New York. IPO 1978 and listed in New York Stock Exchange.

In Fortune 500 ranked number 86 with 181 billion in assets and around 120 million active cards. Price per share $99 (January 2019).

Sources of revenue comes from 2 main category: interest revenue, non-interest revenue:

2018 financial results:

  1. Revenue $40.34 billion
  2. Discount revenue $24.72 billion
  3. Card members rewards redemption $9.7 billion
  4. Profit $6.92 billion

In 2018 annual profit for financial services doubled compared to 2017 result. Earnings forecast for 2019 optimistic because consumers habituating to pay for even small purchases (coffee,grocery,fuel etc) by card. As more times card used, as more revenue for American Express.

Products and services according to
http://www.americanexpress.com including:

  1. Credit cards:with annual fees, without annual fees, cash back, no foreign transaction fee, airplane awards, hotel rewards, low interest, balance transfer cards.
  2. Small business credit cards. Credit limit based on provided financial information. In case of unpaid balance minimum payment required every billing cycle. This type of card increase buying power + rewards.
  3. Corporate cards. Virtual card as well as physical card, helps to control expenses and benefit from reward program.
  4. Prepaid cards. Early direct deposit access, cash back, cash reload, money transfer.
  5. Savings account for achieving financial goals.
  6. Gift cards. Business gift cards and personal gift cards.

American Express provide payment network as well as issuing cards. This give chance to get more commission especially on credit cards late payments. For customers available zero fee cards but most of it in range up to 500 dollars per year. American Express issue cards which marketed to customers as privileged to own. Famous Centurion Credit Card by American Express (black card) available by invite only. Estimated requirements include being active customer with annual spending around $450000, be able to pay initiation fee around $5000 with annual fee $2500.

In 2018 Supreme Court decided that merchants can’t deny payment or ask for another card to save on merchant fees. American Express charges high but it promote innovations in payment industry.

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