Though companies such as Citigroup Inc. have stopped issuing travelers checks, American Express Co. still sees potential for its 110-year-old Traveler's Cheque group, which has lately been showing its age.
Sales of the company's "Traveler's Cheques," which are touted as safer than cash, have stagnated and lost significant ground to credit and debit cards. From 1991 to 2001 the business grew just 4%, to $23.5 billion.
But Valerie Soranno Keating, who was named the group's president last week, said that there is room for growth and that the Cheques are among Amex's most profitable products.
"It is a mistake to look at it as a low-growth area," said Ms. Keating, the successor to Barbara Fraser, who moved to American Express Financial Advisors after a year running the group. "We look at it as having tremendous growth opportunities in spite of declines."
The unit picked up some new business last year when Citigroup discontinued its travelers checks and hired American Express to provide them. Citi now offers its customers a private-label Amex Traveler's Cheque.
American Express has also made deals overseas to offer the Cheques in countries like Japan and Australia. In a further vote of confidence, it recently introduced two related products: gift Cheques and two-signature Cheques.
The company has also made commercials featuring race car driver Michael Andretti and sprinter Marion Jones and added some new products and services that it says consumers will find compelling, such as a 24-hour Cheque and passport replacement. It will even help its customers replace lost or stolen MasterCards and Visas.
Ms. Keating said that consumers, who are more concerned with security now, like the Cheques' guarantees.
"There is a benefit in using Traveler's Cheques for budgeting, and you can lock into the exchange rate," she said. "You can set aside a predetermined amount up front."
Amex may also start offering the Cheques as cards to be swiped at the point of sale, Ms Keating said. "This is about giving our customers options in the prepaid category, where there are opportunities."
In their current form, the Cheques generate profit in a number of ways. For one thing, they are typically bought days or even weeks before a trip, which means the funds float for some time, and Amex gets what amounts to an interest-free loan. The company also charges fees to banks that sell the Cheques; some banks pass that fee on to customers.
A spokeswoman said that American Express does not comment on its agreements with partners, though at a financial presentation last month, Kenneth Chenault, its chief executive officer, characterized the Citigroup deal as significant.
According to Ms. Keating, "in spite of the declines in travel," Amex's Cheques "are growing in relevance to consumers." She also said that she has developed a growth strategy to make them easier to buy. "We look at this from an overall business standpoint, to have payments products that meet all their needs."
Amex's chief financial officer, Gary Crittendon, described the Cheque group as "a low-growth business with very high returns" at last month's presentation.
"We work hard to sustain and harvest its exceptional returns, which provide capital funding for growth in other areas, like lending products," he said.
