Here’s the real reason why American Express gives out such big rewards
Armed with impressive rewards and a loyal customer base, AmEx is a giant in the credit card industry. The company’s revenue has increased by over 32% since 2017 when adjusted for inflation and the company’s shares have shown resilience and growth in a tumultuous market.
“Discount revenue,” or fees charged to merchants that accept its cards, is the company’s main source of revenue. It brought in more than $30 billion in 2022, contributing to more than 58% of total revenue net of interest expense.
“They charge a premium to their merchants to take their cards,” said Lisa Ellis, a senior analyst at MoffetNathanson. “And merchants are willing to pay that premium because American Express is bringing them the most affluent, biggest spenders.”
Because of its reliance on discount fees, big spenders are AmEx’s most important asset. Recent company reports claim that Amex card members spend, on average, three times as much annually as those who aren’t members.
American Express targets these affluent cardholders through a ‘”spend-centric” model that focuses on generating revenues primarily by driving spending on its cards.
That’s where rewards come in. In just 2022, Amex spent almost $17 billion providing services and rewards to its card members.
“That high spend-centric model is the reason why they can provide such strong rewards that they do and why the customers are willing to pay those higher annual fees,” explained Dominick Gabriele, senior analyst at Oppenheimer & Co. “Because the people that are spending are actually making this up in their spend behavior.”
Watch the video to learn more about how AmEx makes billions in revenue each year.
CNN Drama Spills Over to Top Talent Agency
Watch Alicia Silverstone & Stacey Dash Recreate Clueless Scene
Tennis Star Martina Navratilova Reveals She Beat Throat and Breast Cancer
Romeo Beckham trolled in loss to minnows Hendon before David makes swift exit
Niyama Announces Surf Residency with Brad Gerlach
Feeding Jews for a good reason: how to celebrate properly
This Is the Best Running Gear I’ve Found for Short Runners
Is There a Vaccine for RSV, and When Could One Be Approved?
A Ransomware Gang Claims It Hacked Amazon’s Ring
What Are Toothpaste Tablets? Plus 5 Options to Try in 2023: Bite, Huppy, Hello, Unpaste
Josh Brolin Once Called Working With Will Smith on ‘Men in Black 3’ an ‘Insane Asylum’
Why China Is Rejigging Its Financial And Technology Regulations
AI grows more powerful while we become more predictable
‘Gilmore Girls’ Costumer Debunks the Most Popular Fan Theories on the Father of Rory’s Baby
China should step up its game on Law of the Sea
News22 hours ago
Trump’s potential arrest hangs over Capitol Hill
News20 hours ago
Buster Murdaugh Denies Involvement in Death of Teen
Travel22 hours ago
Air Canada Named One of the 50 Most Engaged Workplaces for Sixth Consecutive Year
News20 hours ago
Woman without arms and legs doesn't want empathy; she wants a job
Tech16 hours ago
7-Eleven starts its own EV charging network, 7Charge
Sport22 hours ago
Watch Zinchenko celebrate with Arsenal fans out of car window while driving
Auto14 hours ago
Fiat 500X Replacement Spy Shots Show Model With Familiar Design Cues
Sport23 hours ago
Aston Villa considering shock summer Lukaku swoop Inter Milan loan finishes