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Observers of the payments landscape who are wondering when the business will get its momentum back may have had their question answered early Thursday by the top executives of American Express Co.
Travel and entertainment spending, a key category for AmEx historically and one that was hammered hard by the pandemic, appears to be back on track for the card company, which reported record-high revenue for the fourth straight quarter. Much of this is due to rebounding consumer and business card usage.
“Our spending volumes are tracking” to pre-pandemic levels, said Jeff Campbell, AmEx’s chief financial officer, during a presentation of first-quarter results. Billed business set a new record in the quarter, Campbell pointed out. Indeed, spending on AmEx cards in March reached the “highest [monthly] levels in the history of the company,” Campbell said, pointing out AmEx is “acquiring higher-spending cardmembers.”
Total volume on the network hit $399 billion in the quarter, up 16% year-over-year when adjusted for foreign exchange, AmEx reported, while revenue grew 22% to $14.3 billion. The results, especially those in the company’s key T&E segment, led to an upbeat assessment from AmEx’s top brass, who abandoned all hesitance about whether the travel-and-entertainment-sensitive company was getting back on a normal growth track, with spending up in every T&E category. “We’re seeing a return to trends before the pandemic,” chief executive Steve Squeri told equity analysts listening in on the presentation.
Squeri and Campbell were equally optimistic about the company’s position in merchant acquiring, a crucial business for AmEx as it accounts for 56% of the New York City-based company’s revenue. Airlines and hotels, they pointed out, are rebounding fast, as is international travel overall. Discount fees accounted for $7.95 billion in revenue in the quarter, up 16% year-over-year.
As encouraging as AmEx’s results were, Squeri in particular stressed a need to avoid overconfidence and to keep an eye on competition, much of which is also recovering from the worst impact of the pandemic. “We’re paranoid,” he said. “We think everybody’s coming after us. We challenge the team constantly to develop better value propositions.”
But in answer to an analyst’s question about the competitive effect of forays into payments by major technology companies—particularly Amazon.com Inc. and Apple Inc.—Squeri was less than “paranoid,” stressing AmEx’s ability to work with such companies. Still, he admitted, his competition “is not banks—it’s fintechs and big tech companies. You have to develop a better value proposition. We worry about everybody.”
Apple’s latest gambit in payments is a contactless tap-to-pay capability for Apple Pay as well as cards. Last month, the Panera Bread chain said it was adopting Amazon’s Amazon One biometric-payment technology at select restaurants.
