American Express Company (AXP) is an American financial and travel services corporation with operations in more than 130 countries. Its primary products include charge cards, credit cards, financial services, and travel-related services, which it markets to consumers, business owners, and corporations across the globe. Founded in 1850, the company ranks as the world's largest payment-card company as measured by purchase volume, with approximately $1.1 trillion in total global spending billed during 2017.

Since February of 2018, American Express has been led by Chairman and CEO Stephen Squeri. Other top executives at the company include Mohammed Badi (Chief Strategy Officer), Jeffrey Campbell (Chief Financial Officer) and Marc Gordon (Executive Vice President and Chief Information Officer).

American Express has seen strong tailwinds in recent years, thanks to a broadly healthy global economy. This company is constantly up for comparison against Visa and Mastercard, its two primary rivals in the credit card business. Unlike these other two businesses, however, American Express is both the payment processor and issuer of its credit cards. While this could open up bigger profits if members spend more, it also exposes American Express to more significant risks if the economy turns sour.

American Express' Revenue Growth

The fiscal year 2018 was a major success for American Express. The company logged an annual profit of about $6.9 billion, which was more than double its previous years' figure. Net revenue was an all-time high for the company of $40.3 billion, up 8% year-over-year.

American Express owns many dozens of subsidiary companies, most of which are organized to carry out its business operations in foreign countries. Its most important subsidiaries include two card-issuing banks and several financial services firms based in the United States.

1. American Express TRS

American Express Travel Related Services Company, or TRS, is American Express' principal operating subsidiary. As such, it is the immediate parent of both of the company's card-issuing banks. TRS is treated as a financial holding company, meaning that the Federal Reserve has jurisdiction to supervise and examine its practices.

While TRS contributes to American Express' business ventures in a variety of ways, the company is primarily responsible for providing personnel, facilities, systems and a host of other operational resources to various American Express branches and subsidiary companies. As a result, TRS is the direct or indirect owner of most of American Express' legal entities.

The primary source of revenue for TRS is American Express' discount revenue or the amount earned on transactions with merchants holding card acceptance agreements used to facilitate transactions with cardholders of American Express credit cards. Further, TRS earns revenue through card fees, travel commissions and more.

2. American Express Bank

American Express Bank, FSB, is a federal savings bank headquartered in Salt Lake City, Utah and wholly owned by American Express. The bank issues charge cards and credit cards for small businesses under the American Express Open brand. American Express Open cards and associated services are targeted at firms with up to $10 million in annual revenue and fewer than 100 employees. On the consumer side, American Express Bank issues a variety of charge cards and credit cards under the American Express brand, including co-branded cards with American Express partners.

American Express Bank also offers savings accounts and certificates of deposit (CDs) to consumers across the country under the American Express Personal Savings brand. Accounts are only available online; the bank does not operate any retail locations. American Express Bank also accepts deposits through third-party brokerage partners.

[Important: This subsidiary of American Express was founded in 2000 and acquired by American Express National Bank in April of 2018.]

3. American Express Centurion Bank

American Express Centurion Bank is the second major insured depository institution for American Express. This Utah-chartered industrial bank is headquartered in Salt Lake City. Centurion Bank issues a variety of consumer charge cards and credit cards under the American Express brand. American Express Centurion Bank also accepts deposits through third-party brokerage partners. The bank does not operate any retail locations and is wholly owned by American Express. As of Dec. 31, 2017, American Express Bank and American Express Centurion Bake had more than $64 billion in total deposits combined.

4. Accertify, Inc.

Accertify, Inc. Logo

Accertify, Inc. is a global fraud prevention company with offices in Illinois, Mexico, the United Kingdom, and Australia. The firm offers a suite of technologies and tools used to prevent online payment fraud and manage the risk associated with card-not-present transactions. Its customers include e-commerce companies across the globe, including the likes of StubHub, Inc., JetBlue Airways Corporation (JBLU),, Inc. (FLWS) and Urban Outfitters, Inc. (URBN). Accertify is a subsidiary of American Express Travel Related Services Company and is run by Mark Michelon, President.

Accertify's products are compatible with payment networks used to make online purchases around the world, including all major credit cards and online payment providers such as PayPal Holdings, Inc. (PYPL). The company offers fraud management, chargeback management, data analysis, and payment gateway products that can be combined to provide a full payments solution delivered via a hosted software-as-a-service (SaaS) platform. Accertify also offers managed service options under which e-commerce merchants can outsource the fraud management process to Accertify's staff of analysts. Founded in 2007, Accertify was purchased by American Express in 2010 for a fee of approximately $150 million and is now a wholly-owned subsidiary.

5. AMEX Assurance Company

AMEX Assurance Company acts as the insurance underwriter for travel insurance and other insurance products marketed and sold by American Express companies. It also underwrites certain insurance benefits provided to American Express charge card and credit card holders, including car rental loss and damage insurance, extended warranty protection, product purchase protection and travel accident insurance. The company does not have any retail operations. This company was founded in 1973 as American Automobile Insurance Company of Illinois, later changing its name in 1986. Since September of 2007, it has operated as a subsidiary of American Express.

Recent Acquisitions

As a major financial services company, American Express makes frequent acquisitions of smaller businesses, many of which it integrates into its broad platform of products and services. One of the most recent of these acquisitions was Pocket Concierge, a restaurant reservation platform targeting businesses in Japan. Pocket Concierge was founded in 2011. American Express announced its acquisition of the company in January of 2019 for an undisclosed amount.

Acquisitions Strategy

Many of American Express' acquisitions are completed with the intention of enhancing services for existing card members in order to facilitate ease of use of American Express products and to encourage additional spending. In March of 2018, for example, American Express purchased U.K. fin-tech startup Cake Technologies for just over $13 million. Cake provides a service allowing restaurant-goers to pay a bill more easily. American Express indicated its plans to integrate Cake technologies into its platform to provide members with an enhanced service. Taking this as an example, it's likely that American Express will continue to acquire additional companies in order to further extend its reach as a financial services megacompany.