American Express

AMERICAN EXPRESS
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American Express
American Express Company known simply as American Express is or AmEx is a global service company whose principle products and services are charge and credit payment card products and the company also operate some travel-related services that are offered to customers and businesses worldwide. AmEx operates in four segments which are: U.S Card Services, Global Commercial Services (GCS), International Card Services and Global Network & Merchant Services (GNMS). The company earns about half of its revenues from merchants, where they charge them a discount rate for each transaction that is processed. The other major source of revenue for AmEx is the cardholders themselves who pay annual fees as well as interests that are charged on their balances (Grossman, 1995).
In the financial year of 2010, American Express recorded a net income of $4.1 billion from its total revenues of $27.8 billion. This figure marked an increase from its 2009 net income of $2.1 billion and revenue worth $24.5 billion. As a credit issuer, AmEx performance is highly dependent on the state of the economy. In times of economic downturns, customer spending predictably go down, while booms can precipitate spending and borrowing. With the falling of the home prices in the U.S, tightening of credit market and a general uncertainty that has been that resulted from the subprime lending fiasco, American Express just like other credit issuers in the U.S have been facing a decline in customer spending and an increase in the possibility that some customers could find themselves unable to re...