AmEx Focuses on Small Firms While Assessing the Impact of Tariffs

Top management at American Express Co. early Thursday said the card company’s deal for Center ID Corp., a developer of expense-management software, falls into an overarching strategy to build and reinforce ties with small businesses following years in which AmEx was known for catering to the needs of major firms. The deal closed Wednesday on undisclosed terms.

“We’ve been on a journey here to build up more capability for our [small and medium-size] customers,” chief executive Stephen Squeri told equity analysts during a call to discuss AmEx’s first-quarter results. “One thing that was missing for us was the expense-management piece.”

The deal, which was announced March 6, allows AmEx to offer a more complete range of technologies for small-business operators, Squeri said. The deal, he said, follows similar moves, such as the acquisition in 2020 of Kabbage, a platform offering cashflow-management and financing tools.

Other such deals may emerge, Squeri hinted, because the acquired capabilities “will help from a retention and acquisition perspective” with respect to AmEx’s small-business portfolio, he added, which has taken on added importance following years in which the company focused on big companies. The capabilities arising from these deals, though, Will require coordination. “It all needs to be knitted together,” Squeri said. “Ultimately, you’ll have an ecosystem where all these things live. We’re excited about Center and the suite of capabilities we’ve built out from an SME perspective.” SME refers to small and medium-size enterprises.

Other deals AmEx has consummated in recent years include the reservations platform Resy, acquired in 2019, and Nipendo, a business-to-business payments-automation company, in 2023. Resy, in particular, has come in handy for AmEx in recent months, Squeri said, as Millennials and GenZ consumers “are spending way more on restaurants than on any other category.” These cohorts have been a focus at AmEx in recent years.

Indeed, the AmeX card base now is significantly different from what it was a few years ago. “Our card base has shifted versus what it was in 2019,” Squeri said. “Our Millennials and Gen Z are performing much better than [the industry in general].”

Meanwhile, trade uncertainty arising from tariffs announced by the White House earlier this month are likely to impact that small-business market AmEx is cultivating, Squeri said. “We’re constantly modifying our models,” he said. “We like to think we’re way in front of that. Small businesses will be impacted first. Small businesses could be put in a position where they can’t compete effectively.” From January to April, the U.S. trade-weighted average tariff has risen to an estimated 24% from 2%. The increase, if reciprocated in foreign markets, can complicate the ability of businesses to sell abroad.

Consumers, too, will be affected. “Consumers spend a little bit less, and revolve a little bit less. That’s how they regulate risk,” Squeri said. But AmEx’s card base, he added, “is more premium” than it was five or six years ago. Indicating cardholders may have more resources to confront rising costs.

For the quarter, AmEx reported a 7% increase in revenue year-over-year, to just shy of $17 billion. Net income rose 6%, to $2.58 billion. Discount revenue—the fees AmEx collects from merchants—totaled $8.74 billion, accounting for by far the company’s largest revenue source. That number was up 5% year-over-year on a foreign-exchange-adjusted basis.