American Express 2006 Annual Report Download - page 23

Retail and everyday purchases now make up 65 percent of all spending on American
Express cards, with travel and entertainment accounting for 35 percent.
COMMERCIAL CARDS
Billed business on our commercial cards rose 14 percent in the United States and 17 per-
cent internationally, assuming no changes in foreign exchange rates. We gained share
across all major global markets where we issue these products. Our continued focus
on penetrating the commercial middle market helped drive a 21 percent increase in
spending by midsize companies in 2006.
With decades of experience as a top provider of payment solutions to businesses,
American Express has developed a level of expertise in expense management that we
view as a key competitive advantage. In late 2006, we strengthened this advantage with the
launch of S2S
—
an innovative suite of “source to settle” solutions that will help companies
streamline all aspects of the electronic procurement process. To support this business
expansion, we acquired Harbor Payments, a leading provider of electronic invoicing and
payment technology.
By combining our own deep knowledge of procurement with a state-of-the-art
technology platform, we can offer corporate clients and their suppliers the ability to eliminate
paper processing and vastly reduce their costs. With S2S, they will be able to handle everything
from sourcing goods to invoicing to paying bills online. As most businesses still generate
paper invoices and pay bills by check, this is clearly a large opportunity for us. We began to
market S2S to companies in the United States in early 2007 and plan to expand globally.
GLOBAL NETWORK SERVICES
As our proprietary card-issuing business grew stronger, our network business also continued
its rapid expansion. Although much younger and smaller than our proprietary business, Global
Network Services (GNS) is an increasingly important contributor to our overall results.
GNS had an outstanding year in 2006. The total number of American Express-branded
cards issued by GNS partners around the world grew 39 percent to 15 million. Spending on
cards issued by these partners rose 48 percent globally. This fi gure includes volume related
to the sale of our proprietary card-issuing and related businesses in Brazil, Malaysia and
Indonesia to GNS partners Banco Bradesco, Maybank and Bank Danamon, respectively.
Excluding the transfers, spending on GNS cards rose 36 percent.
GNS signed 11 new partners to issue cards on the American Express network. At
year’s end, we had nearly 110 GNS partners in 120 countries, and many of these partners
introduced new American Express-branded card products in 2006. In international
markets, notable launches included two versions of a Virgin Atlantic American Express
Card from MBNA in the United Kingdom and the Standard Chartered American Express
Card in Hong Kong.
In the United States, we signed GE Money early in the year. Since opening our U.S.
network to third-party issuers in late 2004, all those we’ve signed to date
—
Bank of
America, Citibank, HSBC, Barclays, USAA Federal Savings Bank and GE Money
—
have
American Express-branded products in the marketplace. Already, these cards are
generating strong spending volumes and offer further evidence of how GNS issuers are
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letter to shareholders