Review of famous American payment system American Express
American payment market can be described as one having high levels of bureaucracy and established companies that have been operating for decades. While it may not be the most innovative payment environment, stability and long-standing reputation of its key players are positive factors for many.
Among these companies is payment system American Express, which competes with Mastercard and Visa since issuing its first card in 1958. Although the company was founded much earlier as an international cargo firm, the world knows it primarily as a payment provider with its headquarters in New York.
In today's overview, we will discuss the nature of payment cards and examine business activities of American Express.
What is American Express?
American Express is involved in issuing cards under its brand and providing payment processing services, making it a direct competitor to Visa, Mastercard, Discover, Diner's Club, and other similar payment systems.
The main products of AMEX are credit and debit cards, as well as prepaid cards, which allow the company to earn from transaction commission fees. These commission fees are charged to both cardholders and merchants. Thanks to this, company generates substantial annual profits. American Express cards are popular in the USA, which is quite clear from brand name itself. Special loyalty programs, travel bonuses, and absence of limits on the card help to retain the audience and attract users with good credit scores. Interestingly, the focus on credit scores is particularly strong, and it is considered more challenging to obtain an AMEX card than cards from other payment systems, requiring a genuinely good credit score. This approach helps company maintain its reputation and ensures timely repayment of credit interest.
While this payment system is available in other countries, we can’t really say that it occupies a significant share of international card market. Due to limited acceptance by international merchants, most bank clients prefer to obtain a Visa or Mastercard to have more freedom in their transactions.
American Express has its own full-fledged infrastructure and is not affiliated with Visa or Mastercard, which can be considered an advantage within this business model. However, for clients and partners, this also presents a drawback in the form of higher service charges. Consequently, the cards are not as widely accepted among small merchants, as they simply cannot afford to pay the high fees. This means that for an average client, it is sometimes more convenient and cost-effective to have only a Visa or Mastercard and use it wherever it is accepted.
Although American Express is making confident strides to cover various markets and secure its share of payment volumes, it still lags behind Mastercard and Visa. However, for certain e-commerce products, we recommend to ensure the acceptance of as many card types as possible, especially in the USA. Mass-market goods such as clothing, footwear, online courses, games, books, etc. require high-quality payment coverage due to the diverse audience of websites. This allows to provide the best service and accepting of payments from the maximum number of clients.
Role of payment cards in modern finance
Although various payment methods such as e-wallets, cryptocurrencies, bank transfers, and vouchers are gaining popularity today, cards remain important. The first credit card is believed to have been the Dinner's Club card, issued in 1950. Since then, credit cards have become an integral part of daily life of Americans, serving as an indicator of a person's economic activity. Payment card was an innovation that had long been awaited, encompassing all the functions that cash could not fulfill.
Primarily, bank card allowed people to leave their wallets and physical cash at home, providing greater mobility. In the past, forgetting your wallet at home meant going without lunch, as there was no other way to pay. With development of the internet and online technologies, bank card became a means of paying for remote purchases without the need for cash on hand. An important aspect of the adoption of payment cards was their security. Since cash theft from wallets was common, bank card could protect funds from malicious actors by not providing immediate access to them. Security features such as PIN codes and additional authentication with the bank would stop a thief from using funds on the account immediately, and ability to block card as soon as it is lost would eliminate this risk altogether.
Modern technologies suggest that payment card is becoming outdated. However, user preferences indicate that it will remain with us for a long time, albeit in a different form. Recently, Mastercard announced its plans to create a card without already familiar 16-digit number, but using tokens instead to confirm transactions. It would not be surprising if other payment systems and issuers follow suit, transforming payment cards for the future that has already arrived. Progress over the past 70 years has been so significant that it is hard to imagine where we will come in the next 70, or even 10 years. Therefore, the key to success today is constant progress, development, and adaptation to the changing payment landscape. Fintech illustrates this particularly vividly.
Today, a bank card represents the ability to always have “money available,” with constant access to your bank account and a connection to your financial institution. In online shopping and especially in gaming products, acquiring of cards is a top priority. How to achieve this with maximum effect? Let's discuss this in a consultation with Monoup specialists. During the consultation, we will answer your questions and provide advice on how to set up payment acceptance on your website so that it works for you and brings the desired results such as returning customers and satisfied daily users.
