How Amex reached card parity in the US with Raymond Joabar

  • American Express has worked hard on expanding its network over the past few years.
  • Raymond Joabar, Group President, Global Merchant and Network Services, joins us on the podcast to tell us how that investment has paid off.

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How Amex reached card parity in the US with Raymond Joabar

When I was a kid, my father had a successful friend who prided himself on carrying an Amex card. But frequently, when we went out to a sporting event or a restaurant, he'd have to fumble around for another card because the establishment didn't accept Amex.

That’s changing. Amex has reached parity in the US with other cards. That’s thanks to the work of Raymond Joabar’s team. Raymond is the Group President, Global Merchant and Network Services at American Express, and manages direct and indirect channels for expanding the card network’s acceptance. We talk about the channels Amex is using to expand its footprint and the fintech partners helping it get there. We also talk about the work Amex is doing within transportation, B2B, and crypto.

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The following excerpts were edited for clarity.

Amex's growth over the past few years

Maybe there's some good background on our merchant and network business. We're there to enable our consumer and commercial card members to spend confidently at merchants and transact on our network. There are a few numbers that convey the depth and breadth of our business:

  • We have over 177 issuing and acquiring partners operating in 198 countries and territories;
  • There are more than 70 million merchants globally accepting American Express payment products;
  • We have 122 million cards in force that perform over 9 billion transactions per year and contributed $1.3 trillion in network volume last year.

What's unique about American Express is because we're largely the issuer and acquirer of most of those transactions, we get a lot of great insights. We have what we call a closed loop system -- we have a lot of great information that allows us to provide better fraud control, seeing what's normal, what's not normal, to help provide more insights to merchants and help provide more value to them by accepting American Express products. The growth that we've been on over the last several years of signing up more merchants to accept American Express has been a big enabler of the company's overall growth story.

Growth levers

The first thing I'd say is more places than ever are saying yes to American Express -- we've more than doubled the number of locations that accept our cards since 2017. That's allowed us to achieve virtual parity in the US, which means 99% of the places that accept credit cards accept American Express. Internationally, we've more than doubled the number of locations that accept American Express, as well. And we're going to continue to invest in those areas to drive greater coverage to give our current members more and more confidence to pull out their card at the point of sale and make sure that their card will be accepted in that space.

We've done that through through a variety of different manners. One, we have our own proprietary team that goes out and signs and manages larger merchants. We also have formed a number of different partnerships with payment facilitators, aggregators, and third party processors -- they're a very, very efficient way for us to capture more of the smaller merchants. And many times those payment facilitators, those processors, bundle card acceptance, and so when they're selling in card acceptance, American Express will be right in there.

And then lastly, in certain markets, we form partnerships with with other acquiring banks to be able to provide the acquiring services for us. So that's really allowed us to more than double -- from 2017, we've grown the number of merchants over 200% that accept American Express.

Product innovations

Just in the premium side of of the customer base around around the world, we've invested a lot of money into ensuring that we have very rich and rewarding value propositions to our card members that give them great incentives to pull out their cards. That allows them to earn rewards, whether it's through our proprietary membership awards, or some many times we have co branded relationships, like we do with Delta or British Airways, where customers can earn air miles of some sort.

And when we focus on the premium space, what we find is those card members spend, on average, much more than competing network cards -- that delivers more business to the merchants, and gives them great reason to accept American Express. We also benefit from that as a company, because when you have rich rewards out there, those customers generally tend to have better credit behavior, as well.

I'd say the other thing that that benefits the merchants, as I mentioned earlier, we have a lot of great information. We typically have half the fraud rate as the rest of the industry. Merchants don't want to have a lot of fraudulent transactions. We have very sophisticated models that help us identify when there's suspicious activity out there and can provide much lower fraud rates that allow merchants to feel more confident to accept American Express.

Indirect growth channels

Our proprietary team focuses on the larger, more key merchants that are out there. And our partnerships around the world with payment facilitators, third party processors, they help us capture what I would say is the smaller and medium sized merchants around the world. There's probably an 80/20 rule between our proprietary team and the number of merchants that they sign and the volume that they represent. So generally 20% of some of those merchants, the large ones represent about 80% of the volume on the network. While our partnerships represent probably 80% of the merchants, but only 20% of the volume.

Those payment facilitators and strategic aggregators are great. They simplify the onboarding experience, they do a lot of the simplified the process for those merchants to accept plastic, and many times they'll bundle up all card acceptance, offering one price to offer all cards. And that's been a great lever of growth for us over the last five or six years.

New areas of growth

Transit around the world is opening up to the contactless, tap and go type of approach and cards are helping to play a pivotal role in that. We're working with a lot of the transit integrators to make sure as they open up their their tap and go type of system, we're there at the onset to be able to allow our card members to use their contactless cards on transit. The average size of the transaction is relatively small, but it's a huge thing in terms of everyday spend and convenience. Our Cardmembers have mentioned how important it is to make sure that we have coverage there. And we are -- as each of those transit authorities move towards this more open system, that tap and go type system, we want to make sure that we're there at the onset to make sure our cards are accepted. Globally, it's about a $200 billion opportunity with very, very small average transaction size -- it may only a couple of bucks, but it's a really big convenience of everyday spend for card members.

B2B payments

I'd say first off, there is a lot of focus on B2B for American Express. If you think about your personal lives, we have contactless payments, where you can even pay each other seamlessly person to person through the use of your phones. But in the corporate world, the way that big businesses buy and sell goods to each other is complex. It's costly. It's fraught full of friction, and it's really been ripe for disruption. In the US, it's a $24 trillion opportunity, with 40% in checks.

During the start of COVID, there's been a huge effort towards digitizing -- putting the check in the mail is no longer a great way to make buyers and sellers feel confident with each other. So we're helping to build out the capabilities to have more digital types of payments, whether that's through our card products or other types of real time payments, so that the way in which buyers and sellers can connect with each other is more seamless, secure, and faster. We're also partnering with key players to make it easier for them to leave those paper checks behind and convert to digital payments. It's a huge growth opportunity globally.


The crypto space is an emerging payment area. And we're co-innovating and partnering with a lot of disruptors in fintechs to drive the next generation of payments and really uncover the new opportunities as they evolve into the future.

Over the last four to five months, we've signed some great partnerships. One of them is with i2c, a simple cloud-based issuer processor that makes it simple for fintechs to launch cards to ride on our networks. We announced a partnership with Abra, one of the crypto custodial accounts that wants to issue a credit card. They've selected to have it right on our network where they can tap into our brand, our assets, and our capabilities. The card member will be using their Abra card at the point of sale, earning crypto types of awards. We've also announced an agreement with Cardless to launch cards with brands, including travel providers and retailers on the Amex network. So as crypto continues to evolve, we want to make sure that we have ways to co-innovate.

Virtual cards

Virtual cards are one of the big areas for us -- we're growing out our B2B network and helping to simplify the way in which big businesses buy and sell to each other. Virtual card payments are a great way for those buyers to buy the goods that they're normally going to buy from suppliers and virtual cards are a tremendous way to do that. What gives us a great advantage in that space is we have a lot of existing relationships with a lot of those buyers. And we are helping them find the suppliers that they need to accept those payment products from virtual cards. It's one of the big ways that that digitization of that $24 trillion, or the 40% of that $24 trillion, is happening: through virtual card payments.

Our focus is on capturing more B2B spend and building out the B2B network to make it easier to connect those buyers and suppliers. We're really using a build, buy, and partner approach to that. We recently launched a couple of partnerships like with Versapay and Billtrust that give suppliers who accept American Express virtual cards access to their collaborative AR process, making it really simple for them to accept virtual card payments. We're excited about those partnerships. And we'll look to do more in that same space, recognizing we don't always have to do it ourselves. There are a lot of great partners with super capabilities out there for us to be able to pursue.

Priorities into the end of 2022

We want to continue to improve our overall level of coverage internationally. It's continuing to pursue the approach -- with some of our proprietary sales and through some of our partnerships with payment facilitators and aggregators. It continues to be a great growth opportunity for us. We want to make sure that we are aware card members are travelling, working, and living. Over the course of this last year and the early days of COVID, travel was obviously very depressed. It's been great to see customers around the world with a lot of pent up demand for travel. We want to make sure that we can continue to be where our card members live, work, and travel to and make sure we have acceptance in that space.

We're excited about these partnerships that we have in the fintech space, where we're open for business for fintechs who want to launch payment products with us and see how things continue to evolve. The last thing is just continue to grow that B2B network and simplify the way in which buyers and sellers create commerce with each other and leverage American Express to help them do that in a more simple and easy way.

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