What Is American Express?

American Express, commonly known as Amex, is one of the world's most recognized payment brands. Founded in 1850 and headquartered in New York City, Amex operates fundamentally differently from Visa and Mastercard. While those networks use an open-loop, four-party model where they only provide the network rails, American Express traditionally operates a closed-loop, three-party model in which it acts as both the card network and the card issuer — and in many cases, the acquirer as well.

## The Three-Party Model

In the three-party (closed-loop) model, the parties are:

1. **The Cardholder** — the consumer or business holding an American Express card. 2. **American Express** — serving simultaneously as the card network, the issuer, and often the acquirer. Amex issues cards directly to consumers, sets the cardholder terms, and also maintains direct relationships with merchants. 3. **The Merchant** — the business accepting American Express payments.

This vertically integrated model gives American Express control over the entire transaction lifecycle — from card issuance and cardholder rewards to merchant onboarding and settlement. It also means Amex captures both the cardholder relationship and the merchant relationship, keeping the economics that would otherwise be split between an issuer and an acquirer in the four-party model.

However, Amex has increasingly moved toward a hybrid approach. Through its **Global Network Services (GNS)** program, Amex licenses its network to third-party banks (like banks in Europe, Asia, and Latin America) that issue Amex-branded cards. In these cases, the issuing bank handles the cardholder relationship while Amex provides the network infrastructure. This expands Amex's reach into markets where it does not have a strong direct issuing presence.

## The OptBlue Program

Historically, merchants who wanted to accept American Express had to sign a separate agreement directly with Amex, often at significantly higher rates than their Visa/Mastercard processing fees. This created friction and led many small and mid-sized merchants to decline Amex cards.

To address this, American Express introduced the **OptBlue** program, which allows payment processors and acquirers to set their own pricing for Amex acceptance, similar to how they price Visa and Mastercard. Under OptBlue, the merchant's existing payment processor bundles Amex acceptance into their standard processing agreement, often at rates much closer to (though still slightly higher than) Visa and Mastercard interchange. OptBlue has significantly increased Amex acceptance among smaller merchants, particularly in the United States.

## Premium Cardholders and Higher Spending

American Express has deliberately positioned itself as a premium brand. Its card portfolio — including the Platinum Card, Gold Card, Centurion (Black) Card, and various co-branded cards — targets affluent consumers and frequent business travelers. Amex cardholders have demonstrably higher average transaction values and annual spending compared to Visa and Mastercard holders.

For merchants, this means accepting American Express provides access to a wealthier, higher-spending customer segment. Studies have consistently shown that Amex cardholders spend 2-3 times more per transaction on average than holders of other cards. For businesses in travel, luxury retail, dining, and professional services, declining Amex can mean turning away their most valuable customers.

## Fees and Economics

American Express merchant fees are higher than Visa and Mastercard — typically ranging from 2.5% to 3.5% in the United States, compared to 1.5-2.5% for Visa/Mastercard. This premium reflects several factors: Amex's closed-loop model means it bears the full cost of issuing, fraud risk, and cardholder rewards; Amex reward programs are among the most generous in the industry (funded partly by higher merchant fees); and Amex cardholders represent a premium demographic that merchants are willing to pay more to attract.

In regulated markets like the European Economic Area, interchange fee caps apply to four-party scheme transactions but historically did not apply to three-party schemes like Amex. However, the EU has taken steps to extend some regulatory oversight to three-party schemes with licensing arrangements (GNS-issued cards), narrowing the fee gap in Europe.

## Acceptance and Market Share

American Express is accepted in over 170 countries, but its merchant acceptance network is smaller than Visa's and Mastercard's. In the United States, Amex acceptance is widespread, with the OptBlue program pushing coverage to approximately 99% of merchants that accept cards. Internationally, acceptance gaps are more noticeable, particularly among smaller merchants in Asia, Latin America, and parts of Europe. However, acceptance continues to grow year over year as Amex invests in expanding its network.

Amex accounts for roughly 20-25% of credit card purchase volume in the United States but a smaller share globally. Its strength lies in the premium segment — high-spending consumers and corporate card programs — rather than mass-market transaction volume.

## Integration with PSPs

All major payment service providers support American Express alongside Visa and Mastercard. Merchants using Stripe, Adyen, Checkout.com, Braintree, or similar PSPs can typically enable Amex acceptance with a single configuration change. Under the OptBlue model, Amex transactions flow through the same processing pipeline as other card brands, simplifying integration and reconciliation for merchants.