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American Express' 3 divisions are expected to make $47.1 billion for full-year 2020
(1) Global Consumer Services Group $25.9 billion (55%),
(2) Global Commercial Services $14.4 billion (31%), and
(3) Global Merchant and Network Services $6.8 billion (14%)
Total Revenues
American Express' Business Model
American Express is a global financial services company, whose principal products and services include charge and credit card products along with travel-related services to consumers and businesses.
The company operates a closed-loop payments network, where it acts as an Issuer (financial institutions that issue credit/debit card to customers) and an Acquirer (financial institutions that acquire merchants to increase credit/debit card acceptability).
Has 3 Operating Segments-
1. Global Consumer Services: The company offers a range of charge cards and revolving credit cards to consumers under this division. Additionally, it provides various services such as deposit products, travel services, and installment loans.
2. Global Commercial Services: The company offers a range of card and payment programs, expense management tools, consulting services, and international payments solutions to businesses under this division.
3. Global Commercial Services: The company operates a global payment network which settles transactions, acquires merchants, provides services such as loyalty programs and data analytics to merchants. This division is dedicated to increasing merchant acceptance of American Express cards by maintaining relationships with merchant acquirers and aggregators.
What Are The Alternatives?
Open-Loop Payment Processing Industry: Visa and Mastercard operate an open-loop payments network. In 2018, Visa and Mastercard recorded $8 trillion and $4 trillion of payments volume, respectively.
Closed-Loop Payment Processing Industry: American Express and Discover are closed-loop payment processors. In 2018, payments volume of American Express and Discover were around $1.2 trillion and $376 billion, respectively.
What Is The Basis of Competition?
Competition is based on network’s acceptance, availability, service quality, and customer rewards schemes.
American Express' Total Revenues have grown at an average annual rate of 11% from $32 billion in 2016 to $43.6 billion in 2019, and is expected to grow at a slower pace for the next two years
Total Revenues
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% Change In Total Revenues
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Total Revenue growth of about $6.8 billion over the next two years to be primarily driven by $4.4 billion from the Global Consumer Services division and $1.9 billion from the Global Commercial Services division.
American Express has added $6.7 billion to its total revenues over the last two years.
Revenue growth was primarily driven by non-interest income of consumer services and commercial services divisions.
Total Revenues (A+B+C)
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Global Consumer Services (A)
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Global Commercial Services (B)
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Global Merchant & Network Services (C)
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(A) Global Consumer Services to grow by 19% (about $4.4 billion) in the next two years.
Non-interest income and interest income contributes 68% and 32% of Global Consumer Services Revenues, respectively.
In 2019, the segment reported $16 billion of fees income and $7.6 billion of interest income, respectively.
Global Consumer Services Revenues (A = D + E)
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Fees on Consumer Cards (D)
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Interest Income from Consumer Cards (E)
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(B) Global Commercial Services to grow by 14% (about $1.9 billion) in the next two years, with its share of Total Revenues expected to remain fairly stable
Non-interest income and interest income contributes around 93% and 7% of Global Commercial Services Revenues, respectively.
In 2019,
the segment reported $12.6 billion of fees income and $1 billion of interest income, respectively.
Global Commercial Services Revenues (B = F + G)
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Fees on Commercial Cards (F)
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Interest Income from Commercial Cards (G)
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(C) Global Merchant & Network Services to be driven by increasing acceptance of Amex cards by merchants
Global Merchant & Network Services (C)
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Related Analysis
Our complete set of analyses on American Express
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