American Express 2010 Annual Report Download - page 19

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and non-traditional competitors are working to
deliver digital and mobile payment services for
both consumers and merchants.
In this changing landscape, we aim to be the
payment provider of choice for our customers’
spending, whether that involves taking out a
piece of plastic, clicking online or waving a mobile
phone. As we evolve our business model and
practices, we are starting from a very strong base.
Our position in online spending might
surprise some people. We estimate that online
billings across our merchant base totaled
over $100 billion in 2010, giving us the largest
share of online spending of any major card
issuer. Now let’s widen the comparison to
non-traditional competitors. Both American
Express and PayPal grew online billings by more
than 20 percent, but our global online volumes
exceeded theirs by at least $8 billion, based on
PayPal’s reporting. We believe we are the current
leader in online commerce payments with a long
runway for growth.
Our existing products have a strong online
presence because of the trust people have in our
brand, our commitment to privacy, the growing
role of Membership Rewards in the digital
marketplace, and the many ways we have been
delivering services and building communities
in this space.
Looking ahead, we think there are significant
growth opportunities for charge and premium
credit products, which will continue to adapt
their functionality and delivery methods to fit
an increasingly digital world. The virtual world
truly is a cashless society. As more transactions
and purchases move online, electronic payments
are the only way to pay. This trend serves to shift
the mix of payments away from cash.
At American Express, we don’t see this
transformation as the end of the plastic card,
but rather as the beginning of a new range of
possibilities involving cards, mobile devices
and digital wallets. In any event, the service we
provide isn’t really about the plastic. It’s about
the relationships, the data, the connections and
the customer care systems that create added
value. Form factors will eventually change, but
the value our network generates for customers
and business partners will become more
powerful as we apply new technologies.
At the same time, growth opportunities
outside of traditional charge and credit products—
such as prepaid, payroll cards, remittances and
virtual currencies—are opening up as social
norms change and emerging economies develop.
We are active in these areas, and capturing even
a small portion of this opportunity could add
substantial revenues in the coming years.
We know there are many competitive
threats, including entrants who want to
displace traditional payment providers. But we
have enormous assets: a brand that stands for
service and security; a powerhouse of data and
analytics derived from our closed-loop business
model; a premium customer base; expertise and
breadth across the payments system; advanced
marketing capabilities; rewards as a virtual
currency; and a strong financial foundation.
Our global footprint is another advantage.
More and more, individuals, merchants and
businesses are looking for global solutions. With
a presence in over 130 markets and relationships
with premier banking, retail and airline partners,
we have considerable reach and scale. Our
premium focus and the diversity of our products,
customer groups, and operating models have
helped us generate strong earnings and revenue
growth. Over the last three years, we have
doubled our international business operations’
pretax income, despite the recession.* We believe
17
AMERICAN E XPRESS C OMPANY
*See footnote 25 to the company’s 2010 consolidated financial statements relating to geographic operations for a
reconciliation to consolidated pretax income.