American Express Company (AXP) Last Update 4/11/24
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American Express Company
Trefis Price
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Potential upside & downside to trefis price

American Express Company Company


  1. Global Consumer Services constitute 48% of the Trefis price estimate for American Express Company's stock.
  2. Merchant & Network Service constitutes 27% of the Trefis price estimate for American Express Company's stock.
  3. Global Commercial Services constitute 26% of the Trefis price estimate for American Express Company's stock.


Latest Earnings

In Q4 2023, American Express reported revenues of $15.8 billion, 11% more than the previous year. This could be attributed to a 7% y-o-y rise in Non-Interest Revenues and a 31% increase in net interest income.

Impact of coronavirus outbreak

American Express suffered from the Covid-19 pandemic, as consumer spending dropped, leading to lower business for the credit card giant. The company has co-branding card arrangements with several hotel chains and airlines, e.g., Delta Air Lines, Marriott International, British Airways, Hilton Worldwide Holdings, etc. With hotel occupancy rates and the global travel industry being worst hit by the Coronavirus outbreak due to travel bans and widespread panic, it impacted the credit card giant's revenue prospects in 2020 and 2021.

That said, the topline improved over 2022 and was around $52.86 billion - up 25% y-o-y. Further, the firm posted total revenues of $60.5 billion in FY2023.


American Express is a global financial services company whose principal products and services include charge and credit card products and travel-related services to consumers and businesses across the globe. It's the third-largest player in card transaction volumes in the U.S. after Visa and MasterCard, with $1.1 trillion billed business in 2018.

American Express has three operating business segments: Global Consumer Services Group, Global Commercial Services, and Global Merchant and Network Services.


  • American Express' total Cards-in-Use in the U.S.: The total number of American Express Cards in use in the U.S. has increased from 31.3 million in 2012 to 41.7 million in 2022. Going forward, we expect this figure to increase steadily over the Trefis forecast period.

  • Third-Party-Issued American Express Cards In Use: The number of Third-Party-Issued American Express Cards in use increased from 37.6 million in 2012 to 50.3 million in 2021. If American Express can maintain this growth rate of 7% for the rest of our forecast period, along with a 3% increase in average spend per customer on third-party-issued American Express cards, there could be a 10% upside to our estimate for American Express.


Spend-Centric Strategy

The American Express Issued (proprietary) Cards command an average Discount Fee (commission charged to merchants as a percentage of the dollar value of the transaction) of about 2.48% compared to the industry average of 1.9%, primarily on account of a higher income/spending cardmember base with an average spending per cardmember 2-4 times that of the competitors. This lets American Express charge higher Interchange rates (the portion of the Discount Fee that goes to the Issuing Bank) since it brings higher spending customers to merchants. To maintain and attract high-income consumers, American Express offers greater promotions and membership rewards afforded only by the higher Interchange Rate. This is American Express's much-publicized 'Spend-Centric Model' wherein American Express stands to earn more per transaction (4-8 times per transaction compared to the competition), leading to a higher proportion of Transaction Fees compared to competitors.

Closed-Loop Network

American Express's crucial competitive advantage is its Closed-Loop Network, which serves as the Issuing Bank, the Network Provider, and the Acquiring Bank in a proprietary card transaction. This lets American Express earn the entire Discount Fee on any transaction and allows it to analyze the trends and spending patterns among the various segments of its cardmember base and provide targeted marketing, analytical, and value-added services to the merchants in the process.


Below are some trends that could have a significant impact on American Express and the credit card industry in general:

Growth In Mobile Payments

Mobile phone payments are rapidly gaining popularity, coinciding with the surge in smartphone sales. An increasing number of smartphones manufactured now utilize near-field communication (NFC) chips, which facilitate mobile payments. Mobile payments crossed $1.7 trillion in 2022 and are expected to reach $6.3 trillion in 2028 as an increasing number of phones incorporate near-field communication (NFC) chips to facilitate mobile payments. Further, the percentage of smartphone users making payments through mobile phones was more than 43% in 2022 and is expected to touch 50.1% by 2025.

Greater use of credit and debit cards

Americans are the highest non-cash users, and the trend has grown over the years. Further, we expect it to continue in the future. Outside of the U.S., non-cash penetration is much lower, but the use of cards is expected to increase at a higher rate in emerging markets than the mature markets.

Growth in Online Shopping

Cards are a preferred mode of payment for online shopping. Online retail sales in the U.S. have been growing at a staggering rate over the past decade. The card transaction volumes have moved from predominantly travel sales (air tickets, car rentals, and hotel reservations) to non-travel and entertainment (T&E) areas such as personal and home care products, electronics, books, and clothing. Further, growth in online sales is expected to increase card transaction volumes.