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Amex — Back of the Line?

american express centurionHow AMEX temporarily lost its mojo — and what it’s doing to get it back

In Ancient Rome, centurions were elite military commanders who led their troops from the front-of-the-line. Known for their courage and fighting skills, they suffered many casualties in battles. The centurion is also the symbol for American Express (its most exclusive invitation-only “Black Card” with unlimited spending power is called the Centurion Card), and, like the proverbial warrior, the company has been taking its licks. Increased competition and changes in the social climate have left it bruised, but it’s not going down without a fight.

The past few years have been unkind to Amex. It started with Costco Canada’s decision in 2014 to abandon its long-standing relationship with Amex and to instead co-brand with Mastercard for transactional exclusivity in its stores. This was a heavy blow for Amex, as the co-branded Costco card represented 10-percent of its total membership. Other highly public losses followed: JetBlue cancelled its co-branded Amex card and Amex lost an anti-trust lawsuit with the U.S. Justice Department.

But the company is fighting back on several fronts—and, despite its tiny market share of 5-percent in Canada compared to behemoths Visa at 41-percent and Mastercard at 22-percent, the market is starting to take notice.

To counter accusations that it has lost its cool, especially among millennials who represent decades of future spending, Amex is taking a mobile-first approach. It’s updated its Amex Pay Mobile App, adding “Use Points for Purchase”, push notifications, and touch ID to enable shopping on-the-go. Amex scored a coup by becoming the first Canadian partner of Apple Pay in 2015, and it recently added Android Pay, both of which allow consumers to pay with their smartphones.

“We’ve made it a priority at American Express to evolve alongside the modern consumer to meet their changing needs,” says Chris Gibson, Amex’s Director of Member Engagement. “Whether our Cardmembers want to pay their bills directly through the Amex App, or make a purchase from their mobile device, we offer a range of best-in-class services that enable us to be wherever our customers are – helping us stay competitive in a mobile-driven world.”

Mobile pay forfeits the once-relished opportunity to flash an Amex card, which might be too ostentatious a move for Gen Y. To play to millennials’ “stealth-wealth” approach to status display, the company is now focusing on helping its customers acquire “experiences”, not things. “American Express prides itself by being so much more than a payment card,” says Gibson. “We provide experiential value that fits the different lifestyles and needs of our Cardmembers.”

Eligibility requirements for becoming a cardmember have been considerably relaxed. Amex Canada has, without fanfare, dropped the minimum income requirement on all their cards. For Amex Platinum they formerly declined any applicant who had filed for bankruptcy within the past 7 years. That restriction has now been lowered to filing within the past 2 years.

According to the Canadian Bankers Association, only 58-percent of Canadians pay their balance in full every month. New Amex offerings, like the no-fee, low-interest Essential Card, cater to customers who float a balance, a big departure for a credit card that required balances be paid off. Other offerings include re-loadable pre-paid cards (not yet available in Canada), gift cards, as well as a “newly refreshed” SimplyCash Preferred credit card, which now sports a 2% cashback earn rate (5% for the first 6 months up to $300), a competitive welcome offer, and insurance benefits. It was awarded best cash back credit card for 2017 by Rewards Canada.

High-rollers like Chinese mogul Liu Yiquian, who slapped $140.7 million USD on his Centurion card last year for a Modigliani oil painting, still generate the headlines. But American Express is quietly working hard to diversify its image away from the “I shop, therefore I am” ethos that turns many consumers off.

And investors have apparently paid attention to these efforts. An underperformer for several years, Amex’s stock price has surged 20-percent in the past 2 quarters. Though Amex is not out of the woods yet, and its focus on technology and marketing will take a bite out of profits, there appears to be a lot of fight left in this centurion. Being American Express, apparently, still has its privileges..

About The Author

Rita Silvan is the former editor-in-chief of ELLE Canada magazine. After a successful career in women’s consumer publishing, Rita has pursued her interest in finance, especially in the areas of personal finance and investing for women. She obtained the Chartered Investment Manager (CIM) designation from the Canadian Securities Institute. Rita is the editor-in-chief of goldengirlfinance.com and a finance writer for Tier-1 Canadian banks and bespoke wealth management firms.

2 comments

  1. Amex Canada may have been the initial and only partner with Apple Pay back in 2015 but they aren’t the “exclusive” partner. Apple Pay now also works with Interac, MasterCard and VISA.

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