What is an American Express card?
An American Express card, also known as an “AmEx” card, is an electronic payment card from the American Express (AXP) brand, a listed financial services company. American Express issues and processes prepaid, debit and credit cards. American Express cards are available to individuals, small businesses, and businesses in the United States and around the world.
Key points to remember
- American Express cards are issued by American Express, a publicly traded financial services company, and are credit or debit cards.
- An American Express card, also known as AmEx, can offer a variety of benefits, including reward points, cash back, and travel benefits. Some cards are co-branded, such as those with Delta and Hilton.
- American Express is one of the few companies to issue cards and has a network for processing card payments. Visa and MasterCard both have processing networks, but they do not 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 the few financial services companies in the industry able to issue and process electronic payment cards.
American Express is a publicly traded company in the financial services industry. It offers both credit and network processing services, which gives it a wide range of competitors in the industry. Like traditional lenders, it has the ability to issue credit products which it provides in the form of charge cards and credit cards.
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 services company offering both credit loans and a network of processing services. With multi-product capabilities, American Express generates revenue from both interest-generating products and network processing transaction services.
The term “black card” often refers to the Centurion card from American Express, which is received by invitation only.
American Express generates a significant portion of its revenues through transaction processing. Many merchants accept American Express cards and are willing to pay the transaction fees associated with processing due to the benefits of offering American Express as a payment option to customers.
In an American Express transaction, the merchant acquiring the bank communicates with American Express as the processor and issuing bank in the transaction process. Commercial acquiring banks must work with the American Express processing network to transmit communications in American Express transactions, American Express is also the issuer that authenticates and approves the transaction.
Merchants pay a small amount to American Express for its processing network services which are part of the overall cost of a single transaction. As a high-quality processor and lender, American Express has built a solid reputation in the financial services industry.
Types of American Express cards
American Express offers debit and prepaid credit cards to a variety of residential and business customers. It is also one of the leading credit card providers in the industry that offers monthly credits with card balances that need to be paid back every month.
American Express credit and debit cards follow standard subscription procedures. The company seeks borrowers of fair to high credit quality and is generally not a subprime lender. American Express credit and debit cards offer many benefits in the form of reward points and travel benefits. American Express also offers many branded prepaid debit cards. His prepaid debit cards can be used as gift cards or rechargeable special-purpose payment cards.
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 United States, for example, Bank of America issues certain American Express cards and Banco Santander offers American Express cards in Mexico. American Express also has partnerships with other companies to encourage consumers to apply for their credit cards. An example is its co-branded card with Delta Airlines, which allows consumers to accumulate loyalty miles redeemable on Delta, or its co-branded Hilton hotels.