Is American Express Growing Faster than Mastercard?

credit card on laptop

American Express was founded all the way back in 1850. Since credit cards obviously weren’t around yet, the company’s roots were in express mail. In 1891, Amex expanded to traveler’s cheques. This helped them create a global presence. After first discussing the possibility of a charge card in 1946, the company spent over a decade to launch their Diners Club Card in 1958. By that point, there was so much demand for this type of card that the company issued over two hundred thousand prior to their official launch date.

Since then, the company has added their Green, Gold and Platinum cards, as well as a number of branded partnership cards. This had led to more than one hundred million Amex cards being in circulation, with about half of those belonging to consumers in the US. While this may sound like a clear success story, the company has hit some obstacles along the way.

One issue that plagued American Express for a long time was their practice of charging higher fees than other card companies. This made many merchants reluctant to accept Amex cards from their customers. However, they’ve been able to work around these obstacles and are on the cusp of hitting a very big milestone.

Amex is On Pace to Pass Mastercard

While the year is shaping up to be really strong for all credit card companies, American Express is seeing especially good results. Although Visa is still the dominant market player with a share of over 50%, the momentum Amex has built means they’re poised to take the #2 spot from Mastercard. If this occurs, it will be the first time any of these positions have changed in several decades.

The big move that American Express has made is thanks to posting a growth rate of 10% for the last two quarters. In terms of specific strategies that have helped the company reach this point, the reduction of merchant fees has been instrumental in its recent success. After losing an exclusive deal with Costco in 2016, the company decided to shift to this new model with the goal of driving a faster increase in card loans as well as transaction volumes over the coming years. Based on its current position, this strategy appears to have been the right one.

What This Means for Your Business

Because American Express has long been associated with higher transaction fees, plenty of merchants have made a habit of not accepting this card. But since that’s changing and more people than ever want to use Amex to pay, this is a policy that all businesses should revisit.

If you’re thinking about revising your practices for accepting Amex cards, having the right payment processing partner will make this easy to do. And even if you’re less than thrilled with your current processor, the good news is our online resources ensure that switching to a new credit card processor is as simple as possible.

Posted on Wednesday, October 3rd, 2018