The average yearly spending on American Express cards is significantly higher than that of competing credit cards, which helps explain its thriving network of merchants.
The lender’s cards are now accepted at roughly 160 million merchants worldwide, representing a five-fold increase over the past eight years.
One of the main reasons for this growth is Amex’s international expansion. The average annual spend on Amex cards issued outside of the U.S. is approximately four times higher than competing cards, compared to nearly three times higher for cards issued within the U.S.
“Amex has had the pedal to the metal on card acceptance outside of the U.S. and has made significant progress in connecting with payment facilitators, digital wallets, marketplaces, and aggregators in large markets like China,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research.
“Amex has always delivered a higher level of spending and average purchase sizes for merchants, but the higher cost of acceptance for merchants has historically been a barrier to expanding acceptance,” he said. “While specifics aren’t disclosed, I’m sure Amex has brought some innovative pricing solutions to the table that help to reinforce their value proposition for merchants.”
A Strong Strategy
Amex has long targeted an affluent customer base by requiring higher credit scores and charging annual fees for its products. For example, its premium-tier Platinum Card recently saw its annual fee raised to $695.
This focus on affluent cardholders has paid off: American Express has been able to build and maintain a strong lending portfolio at a time when many consumers are under immense pressure from inflation and rising interest rates.
The strength of this portfolio was underscored by the recent DFAST tests, a set of government-mandated assessments designed to simulate a severe economic downturn. In these tests, both American Express and its main rival in the premium credit card space, Chase, ranked among the top performners—thanks largely to the stability and reliability of their customer bases.
Leaving Home with It
To reward these customers, both Amex and Chase have built a substantial array of travel, dining, and entertainment perks. American Express, in particular, highlighted how travel has also contributed to the expansion of its international merchant network, especially in Japan, the UK, and the Caribbean.
This marks a significant shift for a company that had previously focused primarily on its stateside operations.
“The Amex card has always been strong for travel purchases, but at the same had gaps in utility when travelers reached their destination,” Apgar said. “This push toward expanding merchant acceptance is long overdue and creates significant utility for cardholders, who may no longer be concerned about leaving home without a secondary card brand in case Amex isn’t accepted.”
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