American Express (AXP): What This Company Actually Does

How American Express makes money

American Express issues cards directly to affluent consumers and businesses, and signs merchant contracts directly too — a three-party model that differs from the four-party network Visa and Mastercard run through partner banks. Every time a cardmember swipes, Amex collects a merchant discount fee from the merchant and, from the cardmember, loan interest and annual fees — both sides of the same transaction, at once.

Cardmembers repay charges plus loan interest and annual fees; merchants pay a discount fee averaging 2.24%; overseas partner banks pay licensing and royalty fees back to Amex. Source: 10-K FY2025, p.1, p.11, p.42, p.48.

Where the revenue comes from

Segment totals differ slightly from the consolidated total due to intersegment eliminations. Source: 10-K FY2025, p.51/54/57/60, Note 23 (p.152).

About 22% of revenue comes from outside the U.S. — exposure to currency swings, overseas economic conditions, and local regulation.

Source: 10-K FY2025, Note 23 (p.152), Risk Factors (p.36).

Customers and competitors

No single cardmember or merchant dominates — cardmembers number in the millions. Co-brand partner concentration is real, though.

Source: 10-K FY2025, p.2, Risk Factors p.24.

• Visa · Mastercard — larger four-party (bank-network) systems that charge merchants lower fees, pulling Amex's own fee level down.
• Discover / Diners Club — a three-party issuer-plus-network model like Amex's, now owned by Capital One.
• Chase, Citi and other card-issuing banks — compete directly with premium rewards cards; PayPal, Alipay and other digital-payment players are emerging competitors too.

Source: 10-K FY2025, Item 1 Competition (p.9), Risk Factors (p.23).

The metric that matters most in this sector

Card issuers live and die by billed business — how much and how often cards actually get used — before revenue or profit shows up in the numbers; once billed business slows, revenue growth follows.

The 2021→2023 jump in write-offs mostly reflects delinquency normalizing back up from unusually low pandemic-era levels — a base effect — and it's been stable in the 2.0%-plus range for the two years since.

Source: 10-K FY2025 Table 5/7 (p.48-49), 10-K FY2023 Table 5/7 (p.47-48).

Leadership and ownership

Chairman and CEO Stephen J. Squeri has led the company since 2018 (his 8th year) — a 40-year internal promotion, having joined in 1985 and risen through vice chairman and group-president roles. Founded in 1850, so there's no founder-control issue to track.

Source: DEF 14A 2026, ~p.47 (CEO background), ~p.93/95 (ownership).

Capital returns

FY2025 share buybacks totaled $5.3B and dividends $2.3B — a payout ratio (net dividends over net income) of about 21%. Starting Q1 2026, the quarterly dividend rose from $0.82 to $0.95, a 16% increase.

Source: 10-K FY2025 "Dividends and Share Repurchases" (p.63), 10-K FY2024 same section (p.66).

How this company could fail

• Cardmember credit risk. About 79% of card loans and receivables are concentrated in U.S. cardmembers (year-end 2025), so a U.S. slowdown or rising unemployment could push delinquencies and write-offs up quickly.
• Merchant discount fee pressure. Amex has long charged higher fees than Visa/Mastercard, and that premium has already been sliding as it expands merchant acceptance (2.30% → 2.24%). Interchange regulation and litigation settlements add further downward pressure.
• Premium spend's macro sensitivity, plus partner concentration. High-income and corporate discretionary spending is typically first to pull back in a downturn, and the single Delta Air Lines co-brand accounts for 13% of billed business and 21% of card loans — a lot to lose if that partnership wobbles.

Source: 10-K FY2025 Risk Factors, p.22 (macro sensitivity), p.24 (partner concentration), p.25 (fee competition), p.34 (credit risk).

Five-year financials

Source: 10-K FY2025 p.92 (income) / p.94 (balance sheet) / p.95 (cash flow), 10-K FY2022 p.93/95/96, 10-K FY2021 p.92/94/95. FCF = operating cash flow minus purchases of equipment and capitalized software.

What we still don't know

• The exact FY2023 total debt figure (short-term plus long-term borrowings) — not directly confirmed in this source set; re-check the FY2024 10-K's prior-year comparative balance sheet.
• The precise driver of 2024's net income increase alongside its FCF decline (card-loan growth vs. other working-capital items) — needs further confirmation in cash flow statement footnotes.
• Current dividend yield at today's share price — not calculable from this filing set alone; check the latest closing price separately.
• The exact number of consecutive years of dividend increases — no explicit figure found in the 10-K or DEF 14A text; worth checking a recent earnings call or IR materials.