American Express 2014 Annual Report Download - page 15

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AMERICAN EXPRESS COMPANY | ANNUAL REPORT 2014 14
entrench Visa and MasterCard’s dominant position and lead to the
commoditization of payments cards.
Freedom of choice and fair competition are worth defending. We continue
to believe that the Justice Department’s arguments are flawed and that
we should prevail upon appeal. This initial ruling is a first step in what we
expect will be a lengthy legal process. For now, our non-discrimination
provisions remain in eect.
As I’ve described for you in this note, American Express has turned in
strong earnings and made major strides in our digital transformation over
the past several years. Thanks to our flexibility and financial strength,
we’ve successfully navigated many challenges to grow our business and
reward our shareholders.
Looking ahead, it’s clear that the degree of diculty we face won’t ease
anytime soon.
• The economy is growing again, especially in the U.S., but the pace of
growth is weak in many parts of the world. Meanwhile, the strong U.S.
dollar poses additional challenges. We simply can’t count on a robust
global economy to lift our results.
• New regulations, including those designed to limit card fees paid by
merchants, are challenging our business in many parts of the world.
• The cost to acquire and retain co-brand partnerships is going up.
• And, competition in general is intensifying as both traditional players and
new entrants want to disrupt the marketplace.
On the positive side — and I believe there are many more positives than
negatives — we also have tremendous opportunities to grow our business:
• We have major, untapped potential to benefit from the ongoing multi-
trillion-dollar shift in global payments away from cash and checks.
• The convergence of online and oine commerce is opening up new
opportunities to connect Card Members and merchants. As this
Challenges, but Greater Opportunities