American Express Card

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What Is an American Express Card?

An American Express card, also known as an “AmEx,” is an electronic payment card branded by the publicly-traded financial services company American Express (AXP). American Express issues and processes prepaid, charge, and credit cards. American Express cards are available to individuals, small businesses, and corporate consumers in the U.S. and around the world.1 2

Key Takeaways

  • American Express cards are issued by American Express—a publicly-traded financial services company—and are credit cards or charge cards.2
  • An American Express card, also called an AmEx, can offer a variety of perks, including rewards points, cash back, and travel perks. Some cards are co-branded, such as those with Delta and Hilton.3
  • American Express is one of the few companies that issue cards and has a network to process card payments. Both Visa and MasterCard have processing networks, but they don’t issue cards.

Understanding American Express Cards

American Express cards are issued by American Express and processed on the American Express network. American Express is one of only a few financial service companies in the industry that has the capability to both issue and process electronic payment cards.

American Express is a publicly traded company in the financial services industry. It offers both credit lending and network processing services which gives it a broad range of competitors in the industry. Like traditional lenders it has the capability to issue credit products, which it provides in the form of charge cards and credit cards.2

American Express has its own processing network which competes with MasterCard (MA) and Visa (V). Its most comparable competitor is Discover Financial Services (DFS), which is also a publicly traded financial service company offering both credit lending and a processing service network. With multiproduct capabilities, American Express generates revenue from both interest-earning products as well as network processing transaction services.

The term “Black Card” often refers to American Express’ Centurion card, which is received by invitation only.4

Special Considerations

American Express generates a significant portion of its revenue from transaction processing. Many merchants accept American Express cards and are willing to pay the transactional fees associated with processing because of the advantages that come with offering American Express as a payment option to customers.

In an American Express transaction, the merchant acquiring bank communicates with American Express as both the processor and issuing bank in the transaction process. Merchant acquiring banks must work with the American Express processing network to transmit communications in American Express transactions, American Express is also the issuer which authenticates and approves the transaction. 

Merchants pay a small fee to American Express for its processing network services which are part of the comprehensive fees involved with a single transaction. As both a processor and high-quality lender, American Express has built a strong reputation in the financial services industry.

Types of American Express Cards

American Express offers prepaid debit cards and credit cards to a variety of both retail and commercial customers.1 It is also an industry-leading provider of charge cards which offer month to month credit with card balances that must be paid off each month.2

American Express charge and credit cards follow standard underwriting procedures. The company seeks fair to high credit quality borrowers and is generally not a subprime lender. American Express credit and charge cards come with a variety of benefits in the form of rewards points and travel perks. American Express may offer cash back on certain purchases, though they aren’t among the best cash back cards currently available. American Express also offers numerous branded prepaid debit cards. Its prepaid debit cards can be used as gift cards or special purpose reloadable payment cards.2 1

Partnerships, Co-Branded Cards

American Express issues many of its cards directly to consumers, but it also has partnerships with other financial institutions. In the U.S., for example, Wells Fargo issues an American Express card and Banco Santander offers American Express cards in Mexico.5 6 American Express also has partnerships with other companies to encourage consumers to apply for its credit cards. An example is its co-branded cards with Delta Airlines, which allow consumers to earn frequent flier miles redeemable on Delta, or its Hilton Hotels co-branded cards.3

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