American Express 2004 Annual Report Download - page 20
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Just as it has done in international markets, opening the network in the United States should
enable us to:
increase the number of American Express-branded cards in the marketplace
drive more high-spending transaction volume through our network
increase the acceptance of our cards by merchants around the world
provide more value for merchants by delivering more high-spending cardmembers
to their establishments
create a significant new revenue stream for the company
leverage our existing merchant network.
The economics of a successful network business are compelling. We earn revenues on the
additional transaction volume that GNS cards generate on our merchant network. Since we
already have a robust infrastructure in place to handle this volume, the expense we incur
in generating these revenues is relatively modest. In addition, because our card-issuing
partners own the customer receivables on GNS cards and bear the credit and funding risk,
our capital commitment is also relatively modest. As a result, we earn returns that can pro-
vide additional resources for investments in growth across all our businesses.
Banks realize many benefits from partnering with American Express. They can expand and
strengthen their product offerings by adding American Express-branded cards to their port-
folios. This enables them to give their customers greater choice and helps them to differen-
tiate their products. In addition, our partners are able to design new products built around
customer spending, which is a fundamental change from traditional Visa and MasterCard
products that typically rely on high revolving credit balances to drive profits.
In many respects, opening the network in the United States is a natural evolution of our
business, and we expect it will take the benefits of our global merchant network to a new
level.
TRAVEL
Without the same fanfare that accompanied some developments in our card business, travel
experienced a rebound in business volumes in 2004. Commissions and fees for consumer
and business travel combined rose 19 percent, and American Express strengthened its lead-
ing position in the industry with the successful integration of Rosenbluth International.
Our Consumer Travel Network continued to be an important part of our brand presence
and service delivery around the world. For many of our customers — not just travelers but
card, foreign exchange and Travelers Cheque customers as well — our travel network of
more than 1,700 locations provides important support that enhances their experience with
American Express. In 2004, we expanded exclusive travel programs and enhanced online
offerings by adding a private label version of the Travelocity booking service for air, hotel
and car rental reservations and an online cruise booking service from OurVacationStore.
AXP
AR.04
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