Average Yearly Spending on American Express Cards
The typical yearly expenditure on American Express cards is notably higher compared to competing credit cards, a factor that significantly contributes to its extensive network of merchants.
Wide Merchant Acceptance Worldwide
The lender’s cards are now accepted at approximately 160 million merchants worldwide, marking a significant increase from the roughly 32 million merchants in 2017—an expansion nearly fivefold over eight years.
International Expansion and Higher Spending
American Express has seen substantial growth due to its international expansion. On average, cards issued outside the U.S. have an annual spending rate about four times higher than their competitors, compared to almost three times higher for cards issued within the country.
Strategic Expansion and Innovative Pricing Solutions
The company has made significant progress in partnering with payment facilitators, digital wallets, marketplaces, and aggregators in large markets like China. Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, comments that “Amex has had the pedal to the metal on card acceptance outside of the U.S., and has made notable progress in connecting with payment facilitators, digital wallets, marketplaces, and aggregators in large markets like China.”
Apgar also notes that “While specifics aren’t disclosed, I’m sure Amex has brought some innovative pricing solutions to the table that help reinforce their value proposition for merchants.” The higher cost of accepting American Express cards was historically a barrier, but these strategies are now overcoming such hurdles.
Targeting Affluent Customers
American Express has traditionally focused on an affluent customer base through high credit score requirements and annual fees. For example, its Platinum Card recently increased its annual fee to $695.
Stability Amidst Economic Pressures
This focus on a premium clientele has proven beneficial: American Express has managed to build and maintain a strong lending portfolio during periods of inflation and rising interest rates.
Passing the DFAST Test
The strength of this portfolio was evident in recent DFAST tests, which simulate severe economic downturns. Both Amex and its main competitor Chase performed exceptionally well due to their stable customer bases.
International Merchant Expansion for Travel Perks
To benefit its customers, American Express has expanded its merchant network internationally, particularly in regions like Japan, the UK, and the Caribbean. This push towards broader acceptance aligns with travel perks, enhancing utility for cardholders who no longer need to worry about relying on secondary cards brands when traveling.
Conclusion
American Express’s robust expansion strategy has strengthened its global merchant base, offering both financial benefits and enhanced convenience for users.
