Is American Express a Bank? (Yes, and More…)

American Express is primarily a credit card service provider. However, it offers online banking services to individuals and businesses too.

Let’s discuss what American Express is, its credit card and banking services, and more.

Is American Express a Bank?

American Express offers credit cards, online banking, personal and business loans, merchant payment solutions, and other financial services.

So, although American Express is not exactly a bank, it offers online-only banking services to its clients in the US and worldwide.

American Express was founded in 1850 with a merger of three entities. It mainly offers credit card issuing and management services to clients globally. It is a publicly-traded company with a trade symbol of (AXP).

Unlike its competitors, American Express or Amex has its own credit card payment processing system. Its main competitors are Visa, Mastercard, and Discover in the US and global markets.

What Does American Express Do?

American Express mainly issues different types of credit, debit, and charge cards. It also processes card payments through its own network.

American Express Credit Card Services

It offers different types of card services, including credit cards, debit cards, charge cards, store cards, gift cards, etc.

Its card services are offered to retail and business clients. Most of its credit cards come with rewards points, membership benefits, hotel/travel deals, and many other benefits.

It offers different types of card solutions to retail and corporate customers alike.

  • Prepaid and gift cards
  • Personal and business credit cards
  • Travel, shopping, and rewards cards
  • No-annual fee cards
  • Corporate credit and business cards
  • Store and co-branded credit/debit cards

One of the best things about American Express cards is the rewards program, including deals/promotions offered to all credit cardholders globally.

Then, it offers specifically designed credit cards for selective individuals and corporate users with discrete perks too.

American Express Banking Services

American Express is an online-only bank too. Customers can only apply for a savings or certificate of deposit (CD) account online.

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Its banking services offer competitive interest rates to account holders. Its online bank accounts do not come with minimum deposit conditions and also come with low maintenance fees.

American Express banking services include:

  • High-Yield Savings accounts (personal)
  • Personal Checking
  • Certificate of Deposit (CD)
  • Personal Loans
  • Financial Planning and Investment Management
  • Business Checking Accounts
  • Business Line of Credit

American Express Payment Processing Services

American Express offers credit card payment processing solutions too. Merchants can use the American Express payment network or embed its card processing system with any other provider.

Business clients enjoy other payment solutions like online invoicing, employee payments, electronic fund transfers, etc.

Here are a few major payment processing products by American Express:

  • American Express Go
  • VPayments
  • International Payment Solutions
  • Card Acceptance System
  • Merchant Payment Solutions
  • Automated, Vendor, and Employee Payment Solutions

American Express Loans and Other Services

Its banking services include personal loans and business line of credit options too. Then, there are business credit cards specifically designed for the corporate sector.

Its major financing and other services include:

  • Cash flow solutions – Kabbage products and business insights.
  • Business credit cards and line of credit solutions.
  • Corporate card programs for startups and large companies.
  • Business Payment Acceptance system.
  • Personal and Business Travel solutions with American Express Travel.
  • Card rewards programs through cashback, membership, travel, and shopping deals globally.

In a nutshell, American Express offers banking, credit card, payment processing, financing, and business solutions globally.

Individuals and businesses alike can expect a wide range of products with additional benefits of membership rewards and offer on different products too.

How to Open a Bank Account with American Express?

You can open a Savings or CD bank account with American Express banking services online only. The application process is fully digital and should take only a few minutes.

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In the first step, visit the American Express banking page and locate the “Open an Account” link. Provide your personal information, including name, date of birth, address, email, contact number, and social security number.

Once you receive a confirmation email, register your account with American Express. It should take a few clicks too.

Then, you can sign in with the credentials created and enjoy the online banking services on offer. You can also follow the same steps to open an online bank account through the American Express mobile app.

How Does American Express Make Money?

American Express has different sources of making money through different products, as listed above. We can categorize these services into three main categories below.

Revenue from Cards

American Express collects interest and charges from its millions of cardholders around the world. The most significant part of card revenue comes from cardholders’ interest paid on credit card usage.

As a majority of credit cardholders do not fully utilize the interest-free period, they must pay interest. Credit cards come with the highest APRs in the financial markets too.

Then, American Express charges annual fees, credit card issuance fees, late fee penalties, foreign transaction fees, and other miscellaneous charges.

Similarly, the use of business credit cards is growing. Business credit card interest also makes up a significant portion of credit card revenue earned by American Express.

Merchant Revenue

American Express provides credit card acceptance and payment processing solutions to merchants in the US and around the world.

It charges a high merchant fee percentage to its clients compared to other credit card providers. Thus, a significant proportion of its revenue comes from collecting the merchant fees on these services.

American Express cardholders usually spend more and the total value of these transactions is billions of dollars annually. American Express keeps a tiny percentage of this amount from its merchant partners.

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It also collects charges on other services like international payment solutions, vendor payment systems, etc.

Interest Earnings

Like any other financial entity, American Express also earns through interest income. This revenue comes from different products and investments.

The online banking section of American Express collects interest on personal and business loan products apart from credit cards (mentioned above).

Then, a small portion of interest income comes from investments with other banks and dividends/securities.

The company also generates revenue from other miscellaneous sources like payments from its merchant partners for various products/services.

Types of American Express Cards

We can categorize American Express Cards in several ways. One useful method is to group these cards under their utility tags.

Cashback Credit Cards

The most widely used American Express cards come under this category.

  • Cash Magnet Card
  • Blue Cash Everyday Card
  • Blue Cash Preferred Card

Cashback offers also come with other credit cards, but these cards are designed explicitly for cashback rewards.

Business Credit Cards

Business cards come in two categories. The first one is a co-branded credit card offered in partnership with a brand like Amazon.

The second one comes with the American Express tag.

  • Business Gold and Platinum Cards
  • Blue Business Cash and Business + Card
  • Amazon Business and Business Prime Cards
  • Delta SkyMiles Gold and Platinum Business Card
  • Hilton Honors Business Card
  • Marriott Bonvoy Business Card

Travel Cards

These cards include:

  • Blue from American Express
  • American Express Gold, Platinum, and Green Cards
  • Amex EveryDay Preferred Credit Card
  • Hilton Honors, Surpass, and Honors American Express Aspire Cards
  • Delta SkyMiles Blue, Reserve, Gold, and Platinum American Express Cards
  • Marriott Bonvoy Brilliant American Express Card

American Express credits cards include several other categories too:

  • Reward Points Cards
  • 0% APR cards
  • No Annual Fees Cards
  • Airline and Hotel Cards
  • Low-Interest Cards