Business Units or Product Lines

American Express operates in three main segments: Global Consumer Services Group, Global Commercial Services, and Global Merchant and Network Services. The Global Consumer Services Group provides payment and lending products to consumers. Global Commercial Services offers payment, expense management, and business financing products to businesses of all sizes. Global Merchant and Network Services focuses on merchant acquisition and processing, as well as serving as a network partner to other financial institutions.

Business Models for Each Product Line

Global Consumer Services Group generates revenue primarily through card fees, interest income from outstanding loan balances, and merchant discount revenue. Major expenses include provisions for credit losses, interest expense, and marketing costs. Global Commercial Services earns money through annual card fees, transaction and processing fees, interest on loans, and merchant discount revenue, with expenses similar to the first segment. Global Merchant and Network Services derives revenue from transaction processing fees, and expenses are linked to merchant acquisition and service costs.

Future Opportunities for Growth

Future growth prospects for American Express may include expanding its digital offerings, increasing partnerships with merchants for exclusive benefits, expanding into underpenetrated international markets, and leveraging data analytics for personalized consumer and business products.

Potential Major Risks

Major risks include regulatory changes impacting fees and charges, credit risk associated with economic downturns affecting cardholder repayment ability, competition from digital payment platforms and fintech companies, and potential data security breaches.