Tag: AmEx

Amex cardholders have saved up reward points throughout the pandemic

  • Many Amex cardholders have been stockpiling rewards points, presumably to redeem toward post-pandemic travel.
  • This trend provides an opportunity for the card issuer to bounce back faster once the pandemic subsides.
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Payments & Commerce industry with the Payments & Commerce Briefing. You can learn more about subscribing here.

Some of Amex’s travel-related cobrand cardholders and proprietary cardholders have been saving up points and miles throughout the pandemic, per Bloomberg.

American Express Proprietary Billed Business Annual Growth

Amex cardholders have been stockpiling rewards points.

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Despite being able to redeem points for online shopping, many cardholders are likely saving these points to use later for vacations once international travel revs up again post-pandemic, said Amex CFO Jeff Campbell at a virtual conference recently. Campbell noted that Amex won’t be drastically moving away from its focus on travel, especially since pandemic-driven consumer spending habits aren’t likely to be permanent. 

This trend could position the issuer well once the pandemic subsides and consumer spending picks back up in the travel and entertainment (T&E) sector.

  • Amex modified its rewards strategy during the pandemic to accommodate spending trends. The issuer added rewards offerings such as perks for spending on streaming and wireless services, groceries, and, most recently, it expanded its Uber Eats rewards program. These offerings helped Amex see improved results in Q3—especially in its non-T&E category, which made up a whopping 88% of total proprietary billed business in the quarter—and helped it recover from losses seen earlier in the pandemic. 
  • But pent-up demand for travel might help keep customers with Amex. The card issuer has recently been adding new travel perks for its Membership Rewards cards in preparation for the post-pandemic period: Some cardholders can receive increased credit toward hotel and resort bookings and can use points to pay for car rentals. Amex is also adding new resources to better assist customers in managing their bookings and travel spending. These offerings may entice customers to prepare for traveling once it’s safe, and help Amex capitalize on that demand. 

Amex’s position as an industry leader might lead other issuers to build on travel rewards despite the ongoing crisis. Like Amex, other issuers have pivoted their rewards strategies to better fit consumer spending habits during the pandemic. In April, Capital One introduced new perks to allow cardholders to redeem points toward food delivery and takeout purchases, as well as streaming services.

Meanwhile, Chase offered points for essential purchases like groceries and gas, and enabled rewards for charitable donations made to select organizations during the pandemic. These offerings could help attract customers now, but beyond the pandemic customers may look to redeem rewards centered around travel as the sector picks back up—especially as coronavirus vaccine research continues to improve.

Promoting travel rewards again can help Amex, and other issuers that follow its footsteps, remain top of mind for when consumers start traveling again and help improve spending in the T&E category. 

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Visa, Mastercard and Amex struggle as sluggish travel hits profits

Global travel screeched to a halt during the pandemic, and it’s hurting credit card companies’ bottom line. 

American Express, Mastercard and Visa all reported double-digit drops in profit for the recent quarter, compared to a year ago. The companies pointed to a plunge in international travel as borders remain closed during the pandemic. 

The companies earn a fee off of every transaction that runs on their network, while American Express also makes a significant portion of revenue from annual fees. A lack of cross-border payments is especially painful as those card swipes have higher margins, and end up being more lucrative.

Visa was the latest major card company to report results on Wednesday. Cross-border transactions fell 29%, while Visa’s revenue in the quarter was down 17% from a year ago. The company did not give guidance based on uncertainty around the virus, but said the cross-border weakness remains a “significant and continued drag on revenue growth.” That will likely continue into 2021, according to Visa’s CFO Vasant Prabhu. 

“The cross-border recovery has been sluggish since borders remain closed, and there are significant impediments of crossing borders like quarantines and other such restrictions,” Prabhu said on a call with analysts Wednesday. 

Prabhu cited “significant uncertainties” including the impact of spikes in Covid infections happening in the U.S. and Europe, the timing of reopening of borders, the impact of therapeutics and a vaccine, additional stimulus programs and the economic impact once stimulus programs end. Covid cases in Europe spurred leaders of Germany and France to announce new economic restrictions for the next month, while new cases in the U.S. have hit record highs in recent weeks.

Visa rival Mastercard reported earnings Wednesday, with many of the same themes. Mastercard’s net income fell 28% year over year, and net revenue fell 14%, missing analysts’ expectations. The company reported a 36% drop in cross-border volumes, and did not forecast a rebound in travel spending anytime soon. 

“While we believe that cross-border will ultimately recover, it will take time for people to build their confidence in the safety of travel,” Mastercard’s chief financial officer, Sachin Mehra, said on a call with analysts Wednesday. “We believe that is tied to the broad availability of vaccines and therapeutics, likely towards the latter part of next year.”

Shares of Mastercard have fared the worst in the past week, and are down 11% this week. Visa and American Express are down 8% and 10% this week, respectively.

Amex kicked off the card earnings on Friday with a 40% drop in profit from a year earlier. Travel and entertainment spending was down 69% year over year. While the company is “highly confident” that travel demand will return, “it will take a while,” American Express CFO Jeffrey Campbell told CNBC in a phone interview. 

“The human urge to travel is insatiable, but it will take some time to come back, just like it did after September 11th,” said Campbell, who is also a former American Airlines chief financial officer. “For our

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AmEx issues dismal outlook on business travel spending as profit slumps

By Niket Nishant

a close up of a sign: Pedestrians walk past an American Express sign in New York

Pedestrians walk past an American Express sign in New York

(Reuters) – American Express Co on Friday warned that business travel spending would not pick up before early 2022 after reporting underwhelming third-quarter profit due to weak spending on travel and entertainment by its card users.

In what appears to be a shift in strategy, the New York-based credit card issuer, for long a preferred choice of affluent Americans, walked back on its cost-cutting target of nearly $3 billion in 2020 and decided to spend heavily to add new card customers.


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“We’re all consistent in terms of how we feel about business travel, which is probably not going to (pick up) till late 2021, early 2022,” Chief Executive Officer Stephen Squeri said in a post-earnings conference call with analysts.

Credit card companies have been hit hard as the pandemic-induced recession forces companies to lay off workers and consumers to stay at home, drastically reducing their purchasing power.

Spending on its cards fell 19% to $248.7 billion in the quarter, with travel and entertainment related spending sliding 69% from a year earlier.

AmEx, which has tie-ups with large airlines and hotels and whose largest shareholder is Warren Buffett’s Berkshire Hathaway Inc , set aside $665 million in loss provisions during the quarter.

However, it was still lower than what it set aside last quarter, as the outlook for potential defaults improved, with AmEx saying that overall spending volumes had shown a “steady recovery” since the lows of mid-April.

Online consumer retail spending was a bright spot for the card issuer during the quarter, clocking a 32% jump over last year.

Non-travel and entertainment spending, which comprises most of the spending on AmEx’s network and includes online and offline retail spending, inched up 1% from a year ago after adjusting for cross-currency fluctuations.

Quarterly profit fell 40% to $1.07 billion, or $1.30 per share, missing analysts’ average estimate of $1.35 per share, according to Refinitiv data, hurt mainly by higher expenses.

Total revenue, excluding interest expense, fell 20% to $8.8 billion, but came in ahead of muted expectations.

AmEx shares, which have lost about 16% of their value so far this year, fell 3.5% after reporting results.

(Reporting by Niket Nishant in Bengaluru; Writing by Noor Zainab Hussain; Editing by Shailesh Kuber and Arun Koyyur)

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AmEx profits plunge as travel spending comes to a standstill

American Express’ fourth-quarter profits dropped by 39% as the pandemic’s deep impacts on travel, entertainment and dining dramatically impacted results of the credit card giant

CHARLOTTE, N.C. — American Express’ fourth-quarter profits dropped by 39%, the credit card giant said Friday, as the pandemic’s deep impacts on travel, entertainment and dining dramatically impacted the company’s results.

The New York-based company earned $1.07 billion, or $1.30 a share, down from $1.76 billion, or $2.08 per share, in the same period a year earlier. The results missed analysts’ forecasts, who were looking for AmEx to earn $1.39 a share, according to Zacks Investment Research.

“We recognize that the road ahead continues to be uncertain,” said AmEx CEO Stephen Squeri, in a prepared statement.

The company is also facing consumers and small businesses, hit hard by the pandemic or preparing for more tough times, cutting back spending and cutting up cards. The average spending on an AmEx card fell to $4,486 from $5,630 a year earlier. The average numbers of cards was 90.8 million in the quarter, down from 93 million a year earlier.

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