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American Express and Its Four Operating Segments

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Operating segments

American Express (AXP) operates through four main segments:

  • U.S. Card Services – USCS
  • International Card Services – ICS
  • Global Commercial Services – GCS
  • Global Network and Merchant Services – GNS

The USCS segment is the biggest and contributes around half of the company’s net income.

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U.S. Card Services

USCS issues a range of card products and services to consumers and small businesses in the US. It also provides consumer travel services to card members and other consumers.

The ICS segment issues proprietary consumer and small business cards outside the US and operates coalition loyalty businesses in various countries.

Global Commercial Services

The GCS segment offers global corporate payment services to large and mid-sized companies.

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Global Network and Merchant Services

The GNS segment operates a global payments network that processes and settles proprietary and non-proprietary card transactions. The segment acquires merchants and provides point-of-sale products, multi-channel marketing programs and capabilities, services and data, leveraging the company’s global closed-loop network.

American Express’s Global Network and Merchant Services segment has shown the highest growth of all other segments over the last two years. Its year-over-year billed business growth has been more than 10% for each quarter since 2013.

Billed business includes activities related to proprietary cards, cards issued under network partnership agreements, corporate payments, and certain insurance fees charged on proprietary cards.

Geographical focus

American Express’s US operations account for nearly 85% of its net income. Latin America, Canada, and the Caribbean region account for ~7%. Europe, the Middle East, and Africa contribute 5% to its net income. Japan, Asia-Pacific, and Australia account for 4% of the company’s net income.

The Japan, Asia-Pacific, and Australia region has shown the highest growth of all other regions over the last two years. Its year-over-year billed business growth was 16% in the first quarter of 2015.

Visa (V) and MasterCard (MA) have significant global operations. In contrast, Discover Financial (DFS) is primarily US-focused. American Express forms ~2.6% of the Financial Select Sector SPDR Fund (XLF).

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