Amex plans to cut merchant fees, and increase lending

Mar. 12, 2018 1:49 PM ETAmerican Express Company (AXP)AXPBy: Omer I., SA News Editor6 Comments
  • American Express (AXP -0.7%) has operated a different model to other banks in that it makes most of its money through charging merchant fees on transactions, compared to interest on credit card balances as the key revenue driver in the cards business elsewhere.
  • Looks like that may be about to change according to it's investor day presentation. Amex is planning on cutting fees it charges merchants in order to grow acceptance and drive volumes and in turn revenues higher.
  • The bank says merchant fees will drop 5 to 6 bps this year to 2.37%. Each basis point is equivalent to about 11 cents of earnings per share, according to Don Fandetti of Wells Fargo Securities.
  • New CEO Stephen Squeri also plans to increase lending saying, “More places for our card members to use our products means more revenues — from both spending and lending.”

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