Last month, American Express' chief financial officer Jeffrey Campbell told investors that about
The message was simple: Amex offers cards with the type of value adds that people will pay significant fees to own. Following up on that theme from the
"Card fee revenues were particularly strong, growing 19% and exceeding $1 billion this quarter for the first time," Amex chairman and CEO Stephen Squeri said during the company's quarterly earnings call.
Because such a high number of new cardholders were paying fees for premium cards, Squeri said, the scenario was "providing us recurring subscription-like revenues."
American Express reported earnings of $11 billion for the third quarter, up 8% from $10.1 billion in the prior year. Net income came in at $1.8 billion, up 6% compared to $1.8 billion a year earlier. It marked the ninth straight quarter in which Amex earnings rose 8% or better.
The key for Amex to keep moving forward with revenue growth will be to upgrade the offerings and rewards on the cards, and convert its portfolio so all cardholders are gaining the most benefit, Squeri said.
"The recent strategy of consistently refreshing our products is critically important to not only growing card fees, but it's also what we've seen is an uptick in spending, even from existing cardholders," he added.
The earnings call came a day after American Express announced two products — an upgrade to its corporate card program and a new fraud prevention solution.
Calling it a "refresh" of the corporate card program, Amex added new Uber benefits to its Green, Gold and Platinum cards, doubling the Uber Rewards points to be used for rides or Uber Eats on their business cards. Amex also included higher rewards earnings for those enrolled in Hilton benefits, as well as with Clear, an identity verification process for airports, stadiums and rental car locations.
In a fraud prevention update, Amex will operate the free Enhanced Authorization service for online merchants, allowing them to securely share additional transaction data with the card brand. Amex can conduct a complete risk assessment using data such as the email address, IP address and phone number of the Amex cardholder.
Amex also announced this week that it was adding more options for its cardholders to split restaurant bills and pay with loyalty points when
Squeri said he wants to see Amex blend its corporate card database with its personal card database, meaning encouraging businesses with corporate cards to encourage personal cards for employees.
"This is a welcome opportunity for us," Squeri said. "We really have not focused on penetrating our corporate card base with our personal cards, pretty much forever."
Amex has had companies "ask to bring more value to their employees." Squeri added. "We can do that."
Squeri was quick to point out that the opportunity to test that strategy did not mean that corporate cardholders do not have personal cards. "But it is to say we never utilized our corporate card distribution opportunities within the corporate card, or going to companies that have our corporate card" with new offers.
In the global merchant and network services category, Amex reported third quarter net income of $600 million, up 3% from $580 million a year earlier. Total revenues were $1.7 billion, up 5% from $1.6 billion the prior year. Amex said these increases also were attributable primarily to high cardholder spending.
