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American Express (NYSE:AXP) is the largest U.S. credit-card lender based on purchasing volume. The credit card company recently reported its third quarter earnings on October 17, revealing slightly slower growth. The company did, however, manage to boost EPS by 6% with an 8% increase in cardholder spending domestically, alongside a 6% global increase.

CEO Kenneth I. Chenault helped explain, stating:

"Credit quality remained at the historically strong levels, but we didn't have the same benefit from substantial reserve releases as last year when write-offs and delinquencies were declining at a faster rate."

He continued, stating:

"We continue to see many growth opportunities as new technologies drive the migration of global payments from cash and checks towards plastic and digital transactions. We are strengthening traditional products that deliver value to cardmembers and drive business for merchants. At the same time, we are also moving to broadening our franchise with the extension of our Loyalty Partner business into new markets like Mexico and the recently announced partnership with Walmart to reach new segments of the U.S. market that are looking for an alternative to traditional debit cards and checking accounts."

Let's take a look at some of American Express' latest actions.

Making Moves With Microsoft:

Video gamers will soon receive merchant discounts from American Express, due to a newly announced partnership with Microsoft (NASDAQ:MSFT). Similar to the previous partnerships American Express has forged with Facebook (NASDAQ:FB), Twitter, and Foursquare, customers will have the ability to sync their Amex accounts with their user profiles -- but this time on Xbox Live. This gives gamers in the U.S. and United Kingdom an incentive to spend on their American Express cards to redeem offers earned playing games like the popular Halo 4.

Merchants and cardmembers will be connected through the new Amex sync platform for the first time, which will integrate the credit card company into the interactive entertainment and gaming space. Ross Honey, General Manager of Xbox LIVE Entertainment and Advertising commented:

"With movies, TV, music and games, Xbox is the entertainment hub for more than 40 million active consumers… And now with the integration of American Express' Card Sync technology into our platform, we are able to introduce an entirely new layer of value for our members."

Prepaid Cards With Wal-Mart:

Amex has also created a checking account-like program called Bluebird through a partnership with Wal-Mart (NYSE:WMT). Apparently the Bluebird accounts will have no minimum balance requirements, no monthly fees, and no annual or overdraft fees, either. This program gives American Express a foot in the door of the lucrative prepaid card business, as well as an instant expansion of its customer base.

The move will form a symbiotic relationship for both companies. Daniel Eckert, vice president of financial services for Walmart U.S. elaborated that: "Our customers tell us that they're tired of navigating a complex maze of do's and don'ts to avoid the ever growing list of fees found on checking products." Dan Schulman, group president of Enterprise Growth for American Express, said: "We are recreating and reimagining what checking and banking services might look like in the 21st century."

The move will not only attract non-bank account owners, but consumers who wish to avoid surprise fees as well. Bluebird cards also will be usable at every one of the millions of locations that American Express is accepted. Users also have access to features many prepaid cards don't offer -- like setting up sub-accounts and the ability to deposit a check by taking a picture of it on their smartphone.

Growth Concerns:

Even with slower than expected growth, American Express is remaining profitable, and it's also eyeing new opportunities to capture and expand further growth. In reference to new technologies such as the sync platform and Bluebird, Amex CEO Kenneth Chenault said:

"Bottom line results were driven by higher revenues and lower expenses, a combination that reflects ongoing efforts to contain operating costs while maintaining a substantial level of investment in our marketing and rewards programs."

However, he also stated that:

"Taking full advantage of these and other opportunities, particularly in a slow growth economy, will continue to require rigorous cost containment to help ensure that we have the investment resources needed to continue to deliver on our growth objectives."

American express clearly sees its path to potential growth and recognizes its current weaknesses -- other than the sluggish economy. In my opinion, it is expanding into markets that will help it grow and prosper, even in a slow economic environment, by adapting to the times with programs like Bluebird.

Advantages For Consumers:

Consumers looking for deals will enjoy the Bluebird program's freedom from fees, as well as the added convenience resulting from the ability to avoid account minimums. Regular checking accounts often require minimum balances and charge maintenance fees. The Bluebird program will give consumers the option to have an account to deposit their money and paychecks with many of the same security features as a checking account, but without minimums and fees. There are also no credit requirements to open an account. Not only that, it will give these consumers a prepaid card that will serve similarly to a traditional debit card, but without the possibility of an expensive overdraft fee. This is attractive in tough times, especially for people who are tight on money. Amex is essentially providing the bare minimum functions of a checking account for free.

This will also potentially increase revenues for Amex by expanding its customer base with an injection from Wal-Mart's advertising and promotion. Many customers who don't have traditional bank accounts will likely adopt Bluebird, as well as customers who are wary of the risks posed by miscellaneous fees. According to Wal-Mart's VP of Financial Services Daniel Eckert, as quoted in the Chicago Sun Times, "Bluebird is designed to be a bank account in a box. You will be able to pick up this starter kit box at Wal-Mart checkout aisles for $5. Or you can sign up free online at Bluebird.com." American Express also gets automatic prime advertising from Walmart for its new Bluebird program, which should help transition the program to consumers smoothly.

Additionally, Xbox gamers will be inclined to spend with Amex if they receive rewards for doing something as simple as unlocking an achievement in Halo 4. Amex will give merchant discounts to users with synced Xbox Live accounts who reach certain achievements in video games. If a consumer is going to spend with someone, they are most likely going to spend with the company that gives them rewards and merchant discounts to use their services. Integrating with Microsoft is a smart move to get people spending in frugal times. Announced offers for the Sync platform can be seen here. These offers include discounts on movie tickets, statement credits from Amex, and other perks.

Conclusion:

Valuation-wise, American Express is trading at around $56.70, in between its 52-week range of $61.42-$44.70. The company also pays out a 1.4% dividend, according to Forbes. The upcoming holidays should help boost revenues for Amex as well, as it is assumed that there will be an increase in consumer spending. Amex may see increased customer base expansions and/or increased spending among its already established base, now that it has formed tight alliances with Wal-Mart and Microsoft to provide incentives for consumers to utilize their services and spend on their credit and prepaid debit cards. I might lighten my position in Capital One (NYSE:COF) after the recent run-up to allocate a position for American Express as another financial player in my portfolio for the long term.

Source: American Express: Utilizing Technology To Adapt And Prosper