In this fast-moving era, people tend to rely more on credit cards or charge cards instead of going through the hassle of carrying cash. Nowadays, several companies are providing these services. Amex, also known as American Express, is one such company that provides financial services globally. It offers credit cards, charge cards, and traveler’s checks to customers, businesses, and large enterprises worldwide. It provides customers with insights and experiences that can make their business successful. The company also provides customers with access to the products.
But have you ever wondered how Amex makes money beyond these products and services? This article will uncover all the secrets behind Amex, how it operates, where it operates, its business strategies, and models, what challenges it faces, its revenue generation, and how it manages to be successful in the financial industry. So, let’s get started and learn all about American Express.
What is Amex and how does it Operate?
Amex is a multinational payments company that offers consumers and companies credit and charge cards. In addition to that, Amex is also involved in the transaction processes with the cards that are issued by third parties. Similar to MasterCard, Discover, and Visa, payments are accepted by Amex from all over the world. The difference between Amex, Visa, and MasterCard is that Amex is also an acquiring bank and a card issuer.
It is used to process the transactions made with cards with their logos on them, including the Blue Cash Everyday Card from American Express, the Platinum Card from American Express, and the Delta SkyMiles Blue Card from American Express.
According to a February 2022 Nilson Report, Amex cards are accepted at 12.2 million businesses in the United States. In comparison to that, 12.2 million businesses accept Discover and Visa, and 12.4 companies take MasterCard. According to a December 2021 Nilson Report, Discover is received by 61 million businesses, and Visa and MasterCard are accepted by 80 million businesses globally. On the other hand, the number of businesses accepting Amex is 60 million globally, which is relatively less compared to Visa and MasterCard.
Where does Amex Operate?
The Headquarter of the Company is in New York City, United States. With a total of 2,300 offices all over the world, Amex operates in almost 175 countries. Initially, it started with three leading companies: American Express Financial Advisors, American Express Bank Ltd. (AEBL), and American Express Travel Related Services (TRS).
The Services and Products Offered by Amex
The company is up-and-coming when it comes to providing services or products to its customers and businesses. Different services such as insurance, travel, and financial services are provided to its consumers. The products and services provided by them include:
- Credit cards
- Charge Cards
- Corporate banking
- Traveler’s cheques
What is the Target Audience of Amex?
The company is famous globally and has customers all over the world. The target audience for Amex is generally well-off individuals, small to medium-sized businesses, and large corporations. It targets customers with high incomes and excellent credit scores with the potential to grow their business to take it to the next level.
How Does Amex Make Money?
It is known that Amex provides customers with credit cards and charge cards but are you interested in knowing how Amex makes money? Let us solve this mystery for you. Following are the revenue-generating sources used by Amex:
Discount Revenues
It is the primary source of revenue for the company. It is the fee charged to the merchants whenever they purchase anything using their Amex cards. This fee varies depending on the transaction volume and the merchant’s industry. It typically ranges between 1.5-3.5% of the transaction amount. In 2020, the total revenue generated by Amex from discount fees was approximately 62%.
Net Interest Income
It represents the interest earned on the outstanding loans. The average daily balance method can assess Interest on Card Member loans. In 2022, due to the growth in Card Member loans, net interest income increased by 28%.
Net Card Fees and Other Revenue
It represents the revenue the cardholders generate by charging their annual card fees. The yearly card fees vary depending on the type of card and the number of cards owned for each account. It also includes generating revenue from other costs such as cash advance fees, late payment fees, foreign exchange fees, and additional miscellaneous fees. Amex also provides travel-related services and generates revenue from them by offering travel insurance, car rental, and hotel bookings.
Investment Income
The company invests cash in various financial instruments, including bonds, stocks, and money market funds. Amex generates a large amount of income by investing in these instruments. It makes up 7% of its total revenue.
Growth Strategies
Amex has adopted many growth strategies to generate revenue and to make itself prominent in the financial market. These strategies are discussed in detail below.
Business Strategies of Amex
Amex’s ultimate goal is to provide its consumers with the best products and services. They achieve this goal by following these five strategies:

Focus on the Premium Customers
Amex focuses on targeting premium customers by attracting them with membership benefits and improving their overall travel experience, borrowing, spending, and other lifestyle needs. This quality allows them to expand their overall number of business partners globally.
Strong Merchant Relationships
American Express is focused on strengthening its global network by building strong relationships with merchants. This strong bond with the merchants is created by providing them with marketing insights, fraud protection services, and connections to higher-spending Card Members.
Diverse Services
Amex believes in building a solid position in the financial industry by offering products beyond traditional credit cards. It tends to attract customers by creating innovative products and developing unique features, including banking, travel services, business loans, financing, and other payment solutions for its high-end customers.
Emphasis on Technology
Amex emphasizes investing in technology to provide better products and services to its customers. It includes developing mobile apps, implementing digital payment solutions, and using data analytics to better understand customer behavior.
Global Expansion
Amex is a global brand that operates in almost 175 countries. It plans to increase the demand for financial services in the middle-class populations and also in emerging markets of China and India. They aim to build a strong and unique global position using different business models and strategies.
What is the Business Model of Amex?
Amex deals with various customers ranging from affluent customers and small businesses to large corporations. The business model of Amex creates an interaction between cardholders and merchant partners. American Express provides various credit card products, co-brand cards, charges, and store value to its consumers and small businesses.
Credit Cards: It represents the company’s rate & fee structure, a wide range of payment terms, and grace periods.
Charge Cards: These are the cards with no pre-set spending limits. They are designed for payment methods and not for financing or purchasing.
Prepaid Cards: These payment cards utilize the money already loaded.
Travel Services: The Company’s proprietary network offers premium vacation along with real-time travel services.
What are Key Challenges Faced by Amex?
Although Amex has gained success worldwide, it still faces some challenges. According to the Nilson Report, American is still behind its competitors, Visa and MasterCard, regarding the number of partner merchants. It means that customers might not be able to pay for something with their Amex cards then they would have to pay by using its competitors’ cards such as Visa and MasterCard. Even after reducing its merchant fees, Amex remains higher than its competitor companies, which may be a barrier to merchant acceptance in a broader range.
Conclusion
Amex has become a global phenomenon in the financial industry. It has been able to provide high-end products and services to premium customers and businesses. Operating in more than 175 countries, Amex has proved to be a reliable source for providing credit cards, charge cards, and travel services. It generates revenue in several ways, including discount revenues, net interest income, investment income, net card fees, and growth strategies. Amex still lags behind its opponents, Visa and MasterCard, regarding the number of customers they serve globally. However, Amex provides a more predictable and streamlined service than its competitors, and it continues expanding its clientele worldwide.



Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.
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