American Express makes money every time one of its 86.6 million cardholders swipes, taps, or clicks to pay for something. The company sits in the middle of that transaction, collecting a small percentage fee from the merchant who accepted the card. That fee, called discount revenue, was the single largest source of income in 2025, totaling $37.4 billion. On top of that, American Express charges cardholders annual fees for premium cards like the Platinum and Gold, and earns interest when cardholders carry a loan balance. The whole system works best when high-spending customers use their cards constantly, in as many places as possible, pushing up the total volume of transactions that flow through the network. The diagram below traces where the money goes.
How American Express Makes Money
flowchart TD
A["Card Members Spending
1,670B billed business"] --> B["Card Issuing Revenue
Interest & Fees"]
A --> C["Merchant Acceptance
Millions of merchants"]
C --> D["Merchant Discount Revenue
Fees from merchants"]
B --> E["Total Revenue
72.2B annually"]
D --> E
F["Partner Relationships
Cobrand, loyalty programs"] --> A
F --> C
E --> G["Operating Investment
Technology, marketing, service"]
G --> H["Network Growth
Cards-in-force, merchant reach"]
H --> A
H --> C
E --> I["Operating Cash Flow
18.4B annually"]
I --> G
Five years of financial data tell a consistent story: this business has been growing steadily and generating real cash. Revenue rose from $42.4 billion in 2021 to $72.2 billion in 2025. That is not a spike from one lucky year. It is four straight years of meaningful increases. Net income reached $10.8 billion in 2025, the highest figure in the company's history according to the data provided. The business is also throwing off substantial free cash flow every year.
Total Revenue, 2021 to 2025 (billions)
Revenue has grown every year for five consecutive years, rising 70 percent from 2021 to 2025.
Free cash flow, which is the actual cash left over after running the business, came in at $13.1 billion in 2021, peaked at $19.2 billion in 2022, and settled at $16.0 billion in 2025. That is a healthy and consistent range. Net debt, meaning what the company owes minus what it holds in cash, swung around over the period. It fell sharply from $18.9 billion in 2021 to just $2.6 billion in 2023, then climbed back to $10.0 billion by 2025 as the company borrowed more to fund balance sheet growth. That is worth watching but not alarming on its own given the cash generation. Credit quality across cardholders also remained stable. The rate at which loans were written off as unrecoverable held at 2.3 percent in both 2024 and 2025, and 30-plus-day delinquency rates stayed flat at 1.3 percent.
$16.0B
Free cash flow generated in 2025
One of the most striking trends in the data is the growth in card fees. Net card fees jumped 18 percent in 2025 to nearly $10 billion. That reflects customers choosing to pay higher annual fees for premium cards, which come loaded with travel perks, dining credits, and lounge access. The average fee per card rose to $117 in 2025, up from $92 in 2023. This matters because annual card fees are recurring and predictable, less tied to economic cycles than transaction volumes.
What is a cobrand partnership?
A cobrand card is one that carries two logos, for example an American Express card that also shows the Delta Air Lines name. Delta attracts its frequent flyers to the card, and American Express provides the payment network and credit. Both sides share the revenue. These deals can be enormous sources of spending volume and card fee income, but they are also contracts that expire and must be renegotiated.
A significant share of that volume and fee income runs through cobrand partnerships. Delta Air Lines alone accounted for approximately 13 percent of worldwide billed business and approximately 21 percent of worldwide card member loans as of the end of 2025. Marriott, Hilton, and British Airways are among other named partners. All cobrand agreements are documented risks in the company's own filings. The current Delta agreement runs through the end of 2029. If that contract were renegotiated on worse terms, or lost entirely, the effect on billed business and loan volumes would be direct and material. Cobrand partnerships as a group made up 26 percent of worldwide billed business and 36 percent of card member loans in 2025.
26%
Share of worldwide billed business from cobrand partnerships in 2025
Beyond cobrand risk, the company identifies several other specific threats in its filings. Merchants in certain countries and some U.S. states are legally allowed to charge customers extra for using an American Express card, or to refuse the card altogether. That makes the card less appealing to carry. American Express also concentrates a significant portion of its revenue in just six U.S. states: California, Florida, New York, Texas, Georgia, and New Jersey. A severe recession, natural disaster, or policy change hitting those states would land harder on this company than on a more evenly distributed competitor. Cybersecurity is a persistent concern too. The company holds vast amounts of sensitive payment and personal data and faces constant attacks from sophisticated adversaries. A major breach could trigger regulatory fines, forced card reissuance, litigation, and lasting brand damage.
2025
milestone
Platinum Card refresh and record card fees
American Express refreshed its U.S. Consumer and Business Platinum Cards in late 2025, adding new benefits and raising the value proposition for high-fee products. Net card fees grew 18 percent that year to $9.99 billion, and the average annual fee per card reached $117. The refresh is part of a deliberate cycle of product updates the company uses to justify higher fees and attract new premium cardholders.
Technology competition is also a named risk. Visa and Mastercard are larger global networks by purchase volume, and American Express acknowledges it is the fourth largest general-purpose card network worldwide. Meanwhile, new entrants such as buy-now-pay-later services, digital wallets, and AI-driven payment agents are changing how transactions happen. The company is investing in artificial intelligence and digital tools, including a new Amex Travel App launched in 2025 and an acquisition of expense management software company Center. But the filing explicitly states that AI systems can produce biased or unexpected results, and that competitors may develop superior technology that makes American Express products obsolete.
What does it mean to be a premium card network?
American Express positions itself at the high end of the market by targeting customers who spend more per transaction than the average cardholder. Higher spending means merchants get larger sales, which is the main reason merchants accept a card that charges them a higher fee than Visa or Mastercard. The premium positioning also lets American Express charge cardholders higher annual fees in exchange for better perks.
The premium positioning is the core of the business logic. Average spending per basic cardholder was $25,453 in 2025. That figure is what allows American Express to justify higher merchant fees, which in turn funds the rewards and benefits that keep those high-spending customers loyal. The whole cycle depends on continuing to attract and retain cardholders who spend substantially more than users of competing networks. Millennial and Gen Z cardholders are described in the company's own filings as the fastest-growing cohort, with U.S. Consumer billed business from those groups contributing to an 8 percent overall increase in 2025. Whether younger customers remain loyal to a premium card as they age, or migrate to lower-cost alternatives, is one of the central open questions for the next decade.
$25,453
Average annual spending per basic cardholder in 2025
American Express returned $7.6 billion to shareholders through share repurchases and dividends in 2025, and announced a planned 16 percent increase to its quarterly dividend beginning in early 2026.
The Bet
Premium cardholders keep spending at above-average rates, and each new generation of younger customers adopts the brand at a pace that replaces the ones before them. The entire fee structure, the merchant discount rate, the annual card fee, the cobrand economics, all of it rests on a base of cardholders who spend meaningfully more per transaction than users of competing networks. If economic stress, changing payment habits, or superior competing products cause high-spending customers to move elsewhere, the discount revenue and card fee lines compress together, and the rewards and benefits expenses that were scaled up to serve those customers do not shrink as fast.
Open question
American Express has built a financially strong and consistently growing business around the idea that premium cardholders are worth more to merchants, worth more to partners, and worth more to the network than ordinary cardholders. That logic has held for five years of rising revenue and record profits. But the company competes in a market where Visa and Mastercard have larger global scale, where digital wallets and new payment forms are multiplying, and where the Delta cobrand agreement, representing 13 percent of worldwide billed business on its own, expires in 2029. Can American Express keep earning the loyalty of the next generation of high-spending customers at a rate that justifies its premium fees, or will the combination of competing networks, new payment technologies, and cobrand renegotiations gradually erode the spending volumes that the whole model depends on?
Compiled · 10-K · FY2025
Partner Relationship Risk
American Express depends heavily on cobrand partnerships (like Delta and Marriott cards) which made up 26% of worldwide billed business and 36% of Card Member loans in 2025. These partnerships can be terminated, renegotiated on worse terms, or lost entirely, which would directly reduce spending volumes and customer loans.
Merchant Acceptance Risk
Merchants in certain countries and U.S. states can legally surcharge American Express cards at higher rates than competitors' cards or refuse to accept them altogether. This practice could make American Express cards less desirable to customers and reduce overall transaction volumes.
Geopolitical and Geographic Concentration Risk
American Express generates significant revenue from international operations and from customers in six U.S. states (California, Florida, New York, Texas, Georgia, and New Jersey). Military conflicts like Russia-Ukraine, trade wars, tariffs, and natural disasters in these regions could materially harm business and results.
Cybersecurity and Data Breach Risk
American Express holds sensitive customer, payment, and business data and faces constant sophisticated cyberattacks from nation states, criminals, and insiders. A major breach could result in regulatory fines, mandatory card reissuance, litigation, customer loss, and severe brand damage.
Technology and AI Implementation Risk
American Express must invest heavily in artificial intelligence, digital payments, and new technologies to compete, but these are complex, costly, and uncertain. AI systems can produce biased results or fail unexpectedly, and competitors may develop superior technologies that render American Express products obsolete.
10-K Item 1A · Risk Factors
