American Express 1998 Annual Report Download - page 21

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competitive threats throughout the industry. A
key priority is communicating the added value in
accepting the American Express Card, including
the benefits of Cardmember loyalty and higher
average spending per card. This added value
directly affects our ability to maintain a premium
pricing structure. Our average discount rate,
the fee merchants pay for accepting our cards,
remained flat versus last year, after several years
of slight reductions.
Visa continues their “We Prefer Visa” cam-
paigns targeting specific merchants, industries
and individual markets. In effect, these programs
pay off one merchant or locale while ignoring
others. We thwarted most of their campaigns
during the year, but we expect Visa to continue
these efforts.
FUTURE SUCCESS
Overall, 1998 was a positive year for American
Express Company. Although economic and mar-
ket gyrations affected results in certain areas, we
have repeatedly stated that we will not be dis-
tracted by short-term market movements. We aim
to build long-term value for our shareholders.
We will continue to focus on our growth strate-
gies. Our targets for 1999 and beyond are very
aggressive, but given our talent, superior products
and tenacity, we remain optimistic about the future
of our business.
Our dedicated employees and outstanding
management teams represent significant assets.
We are committed to helping employees develop
throughout their careers with the Company and
we continue to gauge how well we meet their
needs through an annual Employee Survey.
In 1998, a record 80 percent of our entire work-
force participated in the survey. Employees rated
the Company higher than in previous years in
MERCHANT SERVICES
We have been strengthening our relationships with
merchants that accept our cards through an
expanded roster of services, including software
and Internet-based programs that help them man-
age and reconcile transactions.
During the year, we increased our merchant
coverage among supermarkets, retailers, furniture
stores, government agencies and charitable organi-
zations. The number of new merchants signed in
the United States in 1998 increased 16 percent
over 1997. Given those numbers, it is not surpris-
ing that Credit Card Management magazine named
American Express “Acquirer of the Year.”The per-
centage of total Cardmember plastic spending
that can be accommodated by our United States
merchant network now exceeds 94 percent.
Key signings in the United States during the
year included: AT&T residential service, Ameri-
tech, Meijers supermarkets, the largest furniture
chains, Heilig-Meyers and Levitz Furniture, and
NEW JERSEY TRANSIT.
We conducted a number of highly successful
marketing programs during the year, like the
“Double Membership Rewards” program that
helped increase Cardmembers’ spending at gas
stations and supermarkets. A similar program
during the fourth quarter with the world’s
largest retailer, Wal-Mart, produced equally
strong results.
We expanded our ATM business in 1998 with
the acquisition of three networks totaling nearly
3,000 terminals. We are now the ninth largest
operator of ATMs in the United States and plan
to use this network to deliver a range of services
to Cardmembers and to help build retail sales
for merchants.
Merchant satisfaction with American Express
improved, even amid pricing pressures and