American Express
American Express (Amex) is a global financial services company, and one of the world’s most recognisable brands. American Express is the world’s largest card issuer by purchase volume, and processes millions of transactions every day as the foremost network for high net worth individuals.
Probably best known for their premium loyalty schemes, American Express also operate the world’s largest travel network, with all their credit and charge cards carrying varying levels of travel assistance.
American Express Credit Cards and Charge Cards carry some of the most generous rewards schemes in the credit card market, and the company is consistently voted at the top of the industry for its high quality customer care.
Compare American Express Cards
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American Express Platinum Cashback Credit Card | 5% cashback 1st 3 mths, 1.25% thereafter, 0% on purchases for 6 mths | 3% | 18.5% APR |
5% cashback for first 3 months, up to £100 Double cash-back every 13th month Enhanced purchase protection Quality American Express insurances
£25 annual fee No balance transfer deal |
American Express Platinum Charge Card | 40,000 bonus points on spend of £1500 in 1st 3 months | Charge Card | Charge Card |
Charge card, so no interest to pay No pre-set spending limit Comprehensive rewards program Travel and personal protection insurance Annual fee |
American Express Preferred Rewards Gold Charge Card | 20,000 bonus points on spend of £500 in 1st 3 months | Charge Card | Charge Card |
No interest fees to pay No pre-set spending limit Host of rewards and benefits Travel and personal protection insurance Annual fee £95 (£70 1st year) |
BA Premium Plus American Express Credit Card | 18,000 bonus Avios if you spend £3000 in the 1st 3 months | 3% | 50.1% APR |
Summer promotion, 18,000 free Avios Best Avios card Purchase protection & travel insurance Companion ticket on spend over £10k p.a. Annual fee |
Virgin Atlantic American Express Black Credit Card | 0% on balance transfer for 6 months, and 6,000 Virgin bonus Flying Club miles on 1st purchase | 2% | 47.2% APR |
Now with dual Amex & Visa cards 6,000 free Flying Club miles on 1st purchase Double miles - Virgin Hols & Virgin Atlantic 0% on balance transfers for 6 months Annual fee No transfers from MBNA or Virgin cards |
American Express Starwood Preferred Guest Credit Card | 10,000 bonus Starpoints when you spend £1000 in 1st 3 months | 3% handling fee | 34.5% APR |
Starpoints on all your spending Starpoints transferrable to airline programs £75 annual fee |
Virgin Atlantic American Express White Credit Card | 0% on balance transfer for 6 months, 3,000 Flying Club miles on 1st purchase | 2% | 17.9% APR |
Now with dual Amex & Visa cards £ transfers as well as balance transfers Competitive overall charging structure Discounts with many Virgin Companies No transfers from MBNA or Virgin cards |
British Airways American Express Credit Card | 3,000 bonus Avios on spend of £500+ in 1st 3 months | 3% | 19.9% APR |
1.5 Avios per £ spent 3 Avios per £ spent at BA £75,000 travel accident benefit Companion ticket on spend over £20k p.a. High APRWhy is American Express different from the personal card holder’s perspective?
Owning all the ‘transaction fee’ (or merchant discount as it’s referred to within the credit card industry, see above) also gives American Express the cash to offer a market leading range of loyalty programs and benefits packages.
American Express really does take customer service seriously and if you’ve been on the other end of the somewhat average customer service offered by many mainstream (UK) credit card issuers you will immediately notice the difference in approach and attitude from Amex personnel.
American Express consistently comes top in the coveted J D Power Customer Satisfaction surveys for Overall Satisfaction, Credit Card Terms, Rewards and Benefits.
American Express Card’s “Benefits and Rewards” Schemes feature:-
- Generous Membership Reward Points that can be spent on travel or a wide variety of other items, electronics, home and garden, sporting goods, fashion, beauty, even office supplies! (Points can be spent on any airline).
- An enhanced Purchase Protection and Purchase Insurance program
- 24/7 Global Concierge Service (Platinum Card) including worldwide travel & shopping assistance
- Comprehensive Global Travel Insurance
- ‘Premium Access’ and preferred seating at many events, restaurants, concerts and shows
- Priority Pass Airport Lounge access at 600 destinations worldwide
American Express cards for companies
With the rapid globalisation businesses are undergoing, corporations of all sizes are looking for ways to centralise and control expenses for ever more mobile sales forces. American Express has pioneered a variety of corporate payment tools that allow business to control and analyse expenditure. Amex’s Corporate Account Reconciliation system allows businesses to analyse and reconcile exployee expenses on a large scale eliminating the need for manual data entry.
American Express also offers a range of dedicated corporate credit cards aimed at businesses of all sizes that as well offering in depth reporting and insight into where companies spend their money, also offers discounts on travel, car hire and hotels all with centralised booking advisors.
Why is the American Express business model different?
American Express has a different business model to most credit and charge card issuing businesses. Unlike most of its competitors, Amex earns most of its money via direct revenue from cardholder spending and not from interest on card borrowing; its called the spend-centric model. This gives it a unique position in the market which is only possible because of its ownership and control of the entire charging structure.
When a card holder makes a transaction with any type of payment card the retailer accepting the card payment will pay a fee for processing the payment.
Typically this fee is split between 3 different companies:-
- The retailer or shop’s Merchant Services Provider. This is often the bank of the business accepting the payment from the card holder and the company that provides the retailer credit card machine or PDQ terminal linked to their authorisation system.
- The card holder’s bank or card issuer. This the company that the card holder pays their monthly bill to, the company that issued the credit card at outset.
- The processing network. This is the company that provides the link between the retailer and the card issuer, and settles the transaction across their banking system. In Europe this is often VISA or MasterCard.
American Express has grown its business by cleverly fulfilling all three of these functions for transactions involving its cards. Because it lends less than its competitors (many of its top products are charge cards that have to be settled monthly and not true credit cards that offer a line of credit) it tends to be less effected by financial downturns like the recent credit crunch. Because a number of American Express’ key products are charge cards and not credit cards, this also exposes them to less risk in times of austerity.
If a retailer wants to accept American Express Cards, it has to approach them direct and make a contract with them.
Businesses that target high net worth individuals have to consider accepting American Express, even though they often charge more than twice the fees to the retailer other processing networks do, as their customers expect it; they in turn like collecting the associated rewards and cash-back that the cards offer.
Statistically American Express’s customers credit card spend is around four times that of the average MasterCard customer, and around three and half times that of the average VISA customer.
American Express is also well known for its globally recognised Travellers Cheques. What many people don’t know is that one of the key reasons the company offers Travellers Cheques is that due to the way customers use them, millions of Pounds Sterling and American Dollars are always sitting around in uncashed Cheques.
Whilst these Cheques remain uncashed, this money is effectively is sitting in American Express’s accounts, and this gives them the cash to fund the billions of pounds of credit card transactions they do every week, without having to borrow from other lenders.
Current American Express Key Facts:-
- Purchase volume currently around £400 billion on Amex cards
- Largest charge card network globally
- Assets around £80 billion
- 58,000 employees worldwide
- 88 million current cards in force
- Around £16 billion in annual revenue from diverse activities
The future at American Express
Things are changing extremely fast in the electronic payments industry. All card issuers including American Express are facing stiff competition from relative newcomers like WorldPay and PayPal.
Mobile phone manufacturers like Apple are bringing new technology online to allow people to use their smart phones to make payments on the move. Google are also offering technology for their Android operating system that will process mobile payments. Whilst this may not seem a huge short term threat to American Express’s traditional business, these new technologies do present opportunities for the company.
In March 2011, American Express unveiled its Serve technology which will allow existing customers to make payments on their smart phone via an app.
In June, they also announced the recruitment of former Skype Chief Executive Josh Silverman to head up their US consumer card and travel business. Silverman, who also held a senior executive position at Technology Venture Capital Firm Greylock Ventures, would seem to be well qualified to help American Express move decisively into this fast growing part of the market.
