AmEx Downplays Crypto And BNPL As It Posts a Revenue Jump ‘Beyond Our Expectations’

American Express Co. saw its crucial travel-and-entertainment business continue to recover in the final three months of 2021, leading top company executives Tuesday morning to express considerable optimism for 2022. But don’t look any time soon for the New York City-based card giant to make any major forays into buy now, pay later lending or cryptocurrency, hot markets for which rival networks are developing enabling technology.

“We watch crypto more as an asset class,” AmEx chief executive Stephen Squeri told equity analysts during a morning call to discuss AmEx’s fourth-quarter results. “It’s not an intermediate-term threat to our business.” Cryptocurrencies like Bitcoin are far too volatile, he said, to form the basis for a payments product. “In the payments space, that’s a hard thing,” he said. “We’re probably not going to offer a crypto card.”

Squeri’s position on the matter stands in contrast to that of the top brass at rivals Visa Inc. and Mastercard Inc., both of which have announced platform development to support crypto products such as stablecoins.

Similarly, AmEx is not likely to step up its activity in the BNPL business, though a number of companies have entered the market in recent years and Visa and Mastercard have both developed technology to support the installment-lending product. 

AmEx since 2017 has offered a split-payment plan called Pay It Plan It, which works with existing AmEx cards. “We’ve had some increasing usage here but it’s not a dramatic factor in our growth,” Squeri said. “We look at it as an option.” Overall, however, this is not an “option” central to AmEx’s growth plan. “The BNPL audience tends to be lower FICO, tends to be debit card users, it’s not our target audience,” Squeri told the analysts.

The company is focused for now on critical markets like T&E, which chief financial officer Jeff Campbell predicted Tuesday would be “fully recovered” by the end of the year after taking a dive during the pandemic. Squeri added that travel bookings in the fourth quarter were up 27% compared to the same period in 2019, the last full quarter before the pandemic began to shut down travel and other vital businesses. “We’re going to get back to where we were” in terms of cardholder spend, he predicted. 

Network volume in T&E overall in the fourth quarter was up 130% year-over-year, the company reported. It does not release actual dollar figures for segments contributing to revenue. Network volume overall reached $368.1 billion, up 29%.

Discount revenue, by far AmEx’s largest source of income, totaled $7.48 billion for the quarter, up 35% year-over-year. “At the end of the day, we’re driving discount revenue here. That’s what we’re focused on,” said Squeri. Total revenue for the quarter came to $12.1 billion, a 30% increase year-over-year. “Revenue was up well beyond our expectations,” noted Campbell.