What Is an American Express Card?

An American Express card, commonly known as an “Amex” card, is an electronic payment card that bears the branding of the renowned publicly traded financial services company, American Express (AXP). This company is recognized for issuing and processing various types of cards, including prepaid, charge, and credit cards, catering to individuals, small businesses, and corporate consumers not only in the United States but also worldwide.

#### Key Takeaways
– American Express cards are issued by American Express—a publicly traded financial services company—and are available as charge cards, credit cards, or prepaid cards.
– An American Express card, also called an “Amex” card, can provide a range of perks such as rewards points, cash back, and travel benefits. Some cards are co-branded, including partnerships with Delta and Hilton.
– Unlike Visa and Mastercard, American Express is unique in that it both issues cards and operates a network for processing card payments.

Understanding American Express Cards

American Express cards are not only issued by American Express but are also processed through its own network. As one of the few financial service providers with the capability to both issue and process electronic payment cards, American Express occupies a distinctive position within the industry.

Being a publicly traded entity within the financial services sector, American Express engages in credit lending and network processing services, facing competition from a wide array of players in the field. In issuing credit products, American Express offers charge cards and credit cards, much like traditional lenders.

With its proprietary processing network, American Express competes with major players like Mastercard (MA), Visa (V), and Discover Financial Services (DFS) in the financial service space. Through its diverse product offerings, American Express generates revenue from interest-bearing products and transaction services provided over its network.

The term “Black Card” refers specifically to the highly exclusive American Express Centurion card, available strictly through invitation.

American Express Fees

A significant portion of American Express’s revenue is derived from transaction processing. Many merchants readily accept American Express cards and bear the associated transaction fees due to the advantages of providing this payment option to customers.

During an American Express transaction, the merchant’s acquiring bank interacts with American Express, acting as both the processor and the issuing bank in the transaction process. For transactions to go through, merchant acquiring banks must interface with the American Express processing network. Additionally, American Express, as the issuer, authorizes and validates the transaction.

Merchants pay a modest fee to American Express for the processing network services, which are part of the comprehensive fees involved in each transaction. Leveraging its dual role as a processor and a reputable lender, American Express has established a strong presence in the financial services industry.

Types of American Express Cards

American Express caters to a wide range of retail and commercial customers by offering credit cards and prepaid debit cards. It is also a leader in providing charge cards that offer monthly credit, requiring balances to be paid off each month.

American Express adheres to standard underwriting procedures for its credit and charge cards, typically targeting borrowers with good to high credit scores—starting at least around 670—and generally avoiding subprime lending practices.

In addition to a range of benefits like rewards points and travel perks, which vary based on the annual fee charged, American Express cards may offer cash back on specific purchases. Moreover, the company issues several branded prepaid debit cards that double as gift cards or specialized reloadable payment cards.

Annual fees for American Express cards often run on the higher side, such as $95 for the Blue Cash Preferred Card, $99 for the Delta SkyMiles Gold American Express Card, $150 for the Green Card, $250 for the Gold Card, and $550 for the Platinum Card. Notably, the Green, Gold, and Platinum cards do not come with predetermined spending limits. American Express also provides at least six cards with no annual fees, while its customer service consistently ranks highly, as evidenced by J.D. Power’s 2020 U.S. Credit Card Satisfaction Study.

Partnerships, Co-Branded Cards

American Express not only issues cards directly to consumers but also collaborates with various financial institutions. For instance, Wells Fargo and Banco Santander are among the institutions offering American Express cards through partnerships. Moreover, American Express partners with different companies to promote its credit cards, as seen through its co-branded arrangements with Delta Air Lines and Hilton Hotels, providing consumers with opportunities to earn frequent flyer miles and gain additional perks.

Pros and Cons of an American Express Card

Pros

• Green, Gold, and Platinum Amex cards do not come with predetermined spending limits.

• High-quality customer service, with Amex ranking number one in J.D. Power’s 2020 U.S. Credit Card Satisfaction Study.

• An array of rewards, perks, and cash back options offered by Amex cards.

• Require monthly balance payment for charge cards, preventing accruement of high interest charges.

Cons

• Some merchants may not accept Amex cards due to higher transaction fees compared to other cards.

• Minimum required good credit score (670 or higher) to qualify for an Amex card.

• Annual fees for Amex cards can be relatively high.

• Monthly balance must be paid in full for charge cards, restricting use for borrowing purposes.