Introduction
The American Express Company (American Express) was established in the year 1965 as an international finance and travel business company. The main products and services of the company include credit cards and travel related cards and services which are provided to various consumers all over the world. American Express Company has an operating subsidiary called American Express Travel Related Services Company, Inc., (TRC). Both these companies are bank holding companies. The four basic segments in which the company offers services to its clients include U.S. Card Services, International Card Services, Global Commercial Services and Global Network and Merchant Services. The various products of the company include credit card products, consumer and business travel services, stored value products like traveler’s cheques, prepaid cards, network services, expense management products and services, marketing information products, fee services, fraud prevention services, customized products for clients. At the end of the year 2010, the company has acquired Accertify Inc., a company which provides services to traders regarding online frauds and not present card transactions. The paper discusses in detail the various products and services provided by the company
Global Network and Merchant Services
The Global Network and Merchant Services (GNMS) division functions an international all-purpose and common objective charge and credit card network for the cards issued under the Global network and merchant services as well as to the proprietary cards. It also deals with the global merchant services which covers various things like registering and enrolling the merchants so as to give a positive response to cards and additionally the processing and settling the card dealings to the merchants. This division also provides point – of –sale to merchants, provides services related to fraud prevention, marketing the products and services etc. All the cards which bear the logo of American Express are issued by its operating subsidiary Travel Related Service Company, American Express Centurion Bank, American Express Bank as well as by other banks and their subsidiaries which operate outside of the United States of America. Most of the cards are issued by TRS and its subsidiaries – the Centurion Bank and AEBFSB. The main aim of the Global Network Services business is to set up and uphold the affiliation and liaison with banks and other financial institutions which issues cards all over the world in addition to the countries which obtain the local merchants on the American Express network. The GNS business is established in 131 countries all over the world and has in place 129 card issuing and merchant acquiring arrangements. In the year 2010, GNS joined hands with four new partners in order to issue cards and acquire new merchants to the American Express Network. In the year 2010, about 77 new products were launched by American Express making the total number of American Express Products to 1000 approximately. The GNS arrangements of the company are divided into three broad categories – independent operator (IO) arrangements, network card license (NCL) arrangements and joint venture (JV) arrangements.
IO Arrangements: through the IO arrangements, its bank partners are authorized to issue local currency cards in their own countries. These cards include the Green cards, Gold cards and Platinum American Express Cards. Also these partners act as merchant acquirers and processors. In the year 2010, there were about 64 IO arrangements all over the world.
NCL arrangements: in this arrangement it issues license to third party financial institution to issue the American Express cards. The ownership of customer liaisons for all the cards issued by NCL is with the NCL issuer. Customer service would be provided to all its card members. NCL also takes care of marketing cards and designing the product features of the cards. The NCL arrangement has been executed by banks in United States as well as other countries like United Kingdom, Australia and Japan. In the year 2010, about 61 NCL arrangements were made all over the world.
Joint Venture Arrangement: American Express has made use of Joint Venture Arrangement in Switzerland and Belgium and many other countries of the world. In this arrangement, the company links itself with third party so as to set up a different business wherein it has ownership stake. New merchants are signed to the network of American Express and issues local currency cards carrying American Express Logo. In this kind of arrangement, the joint venture becomes responsible for the credit risks of the card member. It also takes up all the operating and marketing costs.
American Express operates a GMS business, which includes signing merchants to accept Cards, U.S. Card Services
As a part of the Company’s Card-issuing business, its United States banking subsidiaries, Centurion Bank and AEBFSB, issue a range of card products and services to consumers and small businesses in the United States. Its consumer travel business, which provides travel services to Cardmembers and other consumers, complements its Card business, as does its Global Payment Options business. The Card business offers a broad set of card products. The Company offers individual consumer charge Cards, such as the American Express Card, the American Express Gold Card, the Platinum Card, and the Centurion Card, as well as the ZYNC Card from American Express; revolving credit Cards, such as Blue from American Express, Blue Cash Card from American Express, Blue Sky from American Expresssm, and Blue Sky Preferred from American Express, and a variety of Cards sponsored by and co-branded with other corporations and institutions, such as the Delta SkyMiles Credit Card from American Express, True-Earnings Card for Costco members, Starwood Preferred Guest Credit Card and JetBlue Card from American Express.
The Company offers a variety of revolving credit Cards. These Cards have a range of different payment terms, interest rate and fee structures, rewards programs and Cardmember benefits. Revolving credit Card products, such as Blue from American Express, Blue Cash from American Express and Blue Sky from American Express, provide Cardmembers with the flexibility to pay their bill in full each month or carry a monthly balance on their Cards to finance the purchase of goods or services. In 2010, it launched Blue Sky Preferred from American Express, which offers double Blue Sky points on hotel, dining and car rental purchases, which can be redeemed towards travel anywhere, anytime, on any airline with no blackout dates or restrictions. It issues Cards under co-brand agreements with selected commercial firms in the United States. Cardmembers earn rewards provided by the partners’ respective loyalty programs based upon their spending on the co-brand Cards, such as frequent flyer miles, hotel loyalty points and cash back. It makes payments to its co-brand partners based primarily on the amount of Cardmember spending and corresponding rewards earned on such spending and, under certain arrangements, on the number of accounts acquired and retained.
The Company issues Cards that are marketed under co-brand partnership arrangements with financial services partners. Such partnerships involve the offering of a standard product (issued by TRS or one of its subsidiaries) to customers of the financial services partner, generally co-branded with the partner’s name on the Card. Under these arrangements, the Company may make payments to the financial services partners that are primarily based on the number of accounts acquired and/or retained through the arrangement and/or the amount of Cardmember spending on such Cards. Certain Cards, particularly charge Cards, charge an annual fee that varies based on the type of Card and the number of Cards for each account. It also offers many revolving credit Cards with no annual fee but on which it assess finance charges for revolving balances. Depending on the product, it also charge Cardmembers an annual program fee to participate in the Membership Rewards programs and fees for account performance or for certain services. In addition to its Unites States Consumer Card business, through AEBFSB, it is also a provider of financial services to small businesses. American Express OPEN (OPEN) offers small business owners a range of tools, services and savings designed to meet their evolving needs, including charge and credit cards, fee-based business solutions to help everyday business operations, such as AcceptPay, InsuranceEdge and SearchManager, rewards on eligible spend and business relevant redemptions, retail and travel protections such as purchase protection and baggage insurance, travel services, 3% to 10% or more discounts at select suppliers of travel, business services, and products through OPEN Savings, expense management reporting and online account management capabilities.
International Card Services
The Company issues its charge and credit Cards in countries around the globe. These are Cards that it issues, either on its own or as co-brands with partnering institutions. It offers many of the same programs and services in its international Card-issuing business as it does o in its United States issuing business. As of December 31,