Careers at American Express
American Express’ (“Amex”) mission is to make American Express the world’s most respected service brand. This is done through the guidance of its three operating principles: (1) Offer superior value propositions to all Amex customers; (2) Operate with best-in-class economics; and (3) Support the American Express brand.
Amex’s primary business is the provision of charge and credit card, and travel-related services to both retail consumers and to corporates globally. They had 4 main business segments: - US Card Services, International Card Services, Global Commercial Services, and Global Network & Merchant Services.
US Card Services – This arm offers card products, including individual and small business charge cards, revolving credit cards, and sponsored and co-branded cards, to retail consumers and small businesses in the US. The card business is their core business, and they earn from annual subscription fees and interest charged on credit and overdraft. In addition to card services, this arm also provides, through American Express OPEN, a suite of services to small businesses. They also offer deposit products and services directly to retail consumers through American Express Personal Savings. The arm also provides travel-related services, through American Express Travel & Lifestyle Services, to cardholders and other consumers, in a manner that complements their core card-based business. They operate a loyalty business, called Plenti, in coalition with other businesses, including AT&T, ExxonMobil, Macy’s, Nationwide, Rite Aid, Direct Energy, Enterprise Rent-A-Car, and Hulu.
International Card Services – Amex also offers card services to retail consumers and small business in certain key markets around the globe. The scale and scope of these services are generally similar to those offered to US cardholders. In addition to the traditional card business, Amex also operates a marketing services arm, Loyalty Partner, which provides market analysis, operating platforms, and consulting services for small businesses.
Global Commercial Services – Amex offers payment, expense management, and travel-related services to large and medium-sized corporates through this arm. Note that small businesses are generally served through its US and International Card Services arms. This arm provides corporate card services, B2B payment solutions, and business travel-related services including travel booking, program management, consulting, and meetings & events management services.
Global Network & Merchant Services – This arm primarily operates a global payments network that settles card transactions. It provides merchants with financing products, multi-channel marketing programs, and reporting and analytical data. It also either acquires merchants or licenses the Amex brand to third-party card issuers to broaden the reach of its card business arms.
These segments operated up to the end of 2015, whereupon they were restructured into 4 different segments effective from 1Q2016. The new segments are: - U.S. Consumer Services, International Consumer and Network Services, Global Commercial Services, and Global Merchant Services.
- U.S. Consumer Services – covers all US card services for consumers, and the domestic American Express Travel & Lifestyle Services arm.
- International Consumer and Network Services – covers the International Card Services arm for consumers, the international American Express Travel & Lifestyle Services arm, and the Global Network Services arm.
- Global Commercial Services – covers all global corporate payment services, the OPEN and other small business service businesses, merchant financing products, and forex services, both internationally and in the US.
- Global Merchant Services – covers all global merchant services, and Plenti and Loyalty Partner.
As the latest reports in 2015 cover only the original 4 operating segments, this report will proceed on that basis.
Amex was founded in 1850 by Henry Wells, William G. Fargo, and John Butterfield. It was an express delivery business that was established to take advantage of the rapid westward expansion of the US at the time. It was competing with the US Postal Service, which was comparatively slow, unreliable, and had limited coverage both in terms of services and area. It was thus not a financial services company, although most of its clients were financial institutions – delivering finance related documents such as cheques, stock certificates, currency, and other financial instruments.
Its first foray into financial services was in 1882, when it launched its money order business. It was a huge success, launching the world’s first traveller’s cheque in 1891. Although Amex was started in the US, through its money order and traveller’s cheque businesses it gained visibility in Europe. The first European office was established in 1895 in Paris, followed by another in London the next year. It began providing currency exchange services in 1905, when it was contracted to do so by the US Immigration Department.
Its expansion into the travel services business was triggered by the advent of World War I, when around 150,000 American tourists were stranded in Europe. This led to a massive surge in demand for Amex services, as these stranded tourists began cashing their traveller’s cheques and money orders in order to travel back to the US. The war saw Amex providing other services, such as relief delivery in partnership with the British Government. Amex officially entered the travel services businesses in 1915, and was undertaking trips to other regions, including South America and Asia, within the decade.
In the following decade, Amex provided quasi-banking services to consumers. As it was not a bank, it could operate on bank holidays and was not subject to regulations such as the Glass-Steagall Act (which averted a potential takeover by Chase Bank – Chase was prevented by the Act from owning non-banking businesses).
Amex launched its first card in 1958, and within half a decade over a million cards were in use. It began launching more cards both inside and outside of the US. In 1984, it acquired Investors Diversified Services – this began its transformation into a full blown financial institution. It celebrated its 150th anniversary in 2000.
Business model of American Express
Amex serves retail consumers and corporates. For corporates, its service offering depends on the size of the company – its services are segmented into small, and medium & large corporates.
- Retail Consumers – Amex provides card-related services, including charge, revolving credit, and co-branded cards. It also provides deposit, and travel related services to retail consumers. These services also come with a reward system that provides cash-back, discounts, and other incentives with heavy use.
- Small Businesses – Amex also provides card-related services that are tailored toward small businesses, including charge, revolving credit, and cobranded cards – similar to the offering to retail consumers. They also offer OPEN, a suite of services for small businesses, including travel and concierge services, retail and travel insurance, expense management tools, and dedicated client managers.
- Medium & Large Businesses – Amex offers slightly different card services for medium and large businesses, including corporate cards and attached expense management systems. They also offer b2b payment solutions and travel-related services.
Amex also acquires or partners with merchants who use its card system. These merchants are small, medium, or large businesses, and pay a fee for every transaction facilitated by the Amex network – this is Amex’s largest revenue stream.
Amex’s stems from its unparalleled global network that provides merchants and retail consumers with access to a convenient networked payment system that allows them to handle payments across borders and without cash. Amex also has a reputation as a reliable service provider, having built up its brand as a household name.
Amex also tailors its offerings to its various customer segments, with different services being provided to customers that need them. For example, for retail consumers, it provides a loyalty service through Plenti that includes large consumer brands such as AT&T, ExxonMobil, Macy’s, Nationwide, Rite Aid, Direct Energy, Enterprise Rent-A-Car, and Hulu.
Amex uses a multi-channel approach, with channels depending on the type of customers being reached out to. These channels include direct mail, online applications, in-house and third-party sales teams, and direct advertising.
A large part of Amex’s business involves reaching out to merchants who are potential users of the Amex network. It does this through several channels – an in-house sales team, third party sales and service agents, acquirers, aggregator, & aggregators, partnerships with banks and payment processors, internet services, telemarketing, and phone.
Amex maintains customer relationships either directly, through its in-house sales and service teams, or through a third party independent operators.
The use of either channel depends largely on the country of operation – in some countries Amex chooses to operate through an independent operator network or through network card license agreements or joint ventures with local or international players, leveraging on their local presence and connections, instead of building a proprietary network.
Amex’s key activities are the provision of card and travel services, and related ancillary services.
Amex’s key partners are merchants around the world that use its payment systems and pay a discount fee for each transaction – the largest source of revenue for Amex.
It also partners with other consumer brands to provide co-branded cards and rewards, for example its partnership with Delta to provide Delta SkyMiles, or its partnership with AirBnB and Best Buy to allow cardholders to use their reward points to pay for their products.
Amex also partners with card distributors, including card issuers and acquirers, merchant acquirers, independent operators, and network card licence holders, all of whom license the Amex brand. Amex also enters into joint ventures in order to break into certain markets – this was done, for example, in Switzerland.
Amex’s key resources are its merchant and payment network, its goodwill, and its customer relationships.
Amex’s key costs include contra-revenue, which is money paid out to merchants, corporate and retail clients, and other customers for rewards, rebates, and discounts, employee salaries, interest on deposits and long term loans, and marketing expenses.
Amex’s main revenue streams are:
- Discount revenues – its largest income stream, this comes from fees charged to merchants when Amex cardholders use their cards to purchase items from them.
- Net card fees – this comes from annual card subscription fees.
- Travel commissions and fees – this comes from transaction or management fees to customers and suppliers.
- Other commissions and fees – these come from foreign exchange conversions, card-related fees, loyalty coalition-related fees, and other service fees.
- Interest on loans – this comes from interest earned on outstanding balances (e.g. from provision of credit)
- Other revenue – this comes from various other parts of the Amex business, for example from contracts with Global Network Services partners, insurance premiums, investments, and others.
|Source of Revenue/Cost||Revenue (FY 2015, million USD)||% of Total Revenue|
Net Card Fees
Travel Commission and Fees
Interest on loans
Other commission and fees
Marketing and Promotion
Card Member Rewards
Card Member Services and other
Provisions for losses
info: Kenneth holds a BA from Bowdoin College and a JD from Harvard. As a fresh law graduate, he joined Roger & Wells, a law firm, as an associate. Following that, he was a consultant with Bain & Co. In 1981 he joined Amex’s Strategic Planning Group and became the CEO in 2001.
info: Jeffrey holds a BA from Stanford and an MBA from Harvard. After graduation, he joined Deloitte, Haskins and Sells as a Chartered Public Accountant, following which he joined AMR, eventually becoming its CFO in 2002. After AMR, he joined McKesson as its CFO in 2003 and finally joined Amex as its CFO in 2013.
info: Stephen holds a BS and MBA from Manhattan College. He started his career as a management consultant with Arthur Andersen & Co in 1982. He joined Amex in 1985 as a manager in the Traveller’s Cheque Group, rising through the ranks to become the President of the Global Commercial Card group in 2002, the Group President of Global Services in 2009, and the Group President of Global Corporate Services in 2011. He was named the Vice Chairman in October 2015.
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