American Express runs a payments network and card business that earns money three ways: it charges merchants a small fee every time a customer swipes an American Express card, it collects annual fees from cardholders who want access to rewards and benefits, and it earns interest from customers who carry a balance on their card loans. The merchant fee, called discount revenue, is the biggest piece. In 2025 it totaled $37.4 billion. The company is not just a middleman like a pure payment network. It also issues the cards directly to consumers and businesses, which means it sits on both sides of every transaction and collects data from both ends. This dual position shapes everything about the business. The diagram below traces where the money goes.
How American Express Makes Money
flowchart TD
A["Card Members Spend
1,670B billed business"] -->|fees & interest| B["Card Issuing Revenue
Primary revenue stream"]
C["Merchants Accept Cards
Millions worldwide"] -->|discount rates| D["Merchant Acquiring Revenue
Secondary stream"]
A --> E["Integrated Payments Platform
Data, analytics, fraud tools"]
E --> F["Partner Benefits & Offers
Cobrand, dining, travel"]
F -->|increased engagement| A
B --> G["Operating Cash Flow
18.4B annually"]
D --> G
H["Network Partners
66.2M cards issued by third parties"] -->|processed volume 227B| D
G --> I["Reinvestment in Innovation
Tech, membership benefits"]
I -->|better experience| A
I -->|merchant tools| C
Five years of financial data tell a clear story. Revenue has climbed every single year, from $42.4 billion in 2021 to $72.2 billion in 2025. That is a 70 percent increase in four years. The growth has not come from one lucky year. Each year added between $6 billion and $13 billion in new revenue on top of the last. Net card fees, the annual membership charges cardholders pay, grew 18 percent in 2025 alone, reaching $9.99 billion. That number matters because it is recurring and largely independent of how much any one cardholder spends.
Total Revenue (2021 to 2025)
Revenue in billions of dollars. Source: XBRL financials.
Cash generation has been strong but uneven. Free cash flow peaked at $19.2 billion in 2022, then pulled back to $12.1 billion in 2024 before recovering to $16.0 billion in 2025. The swings do not signal a broken business. They reflect the company investing heavily in rewards, card benefits, and customer acquisition during the same period that revenue was growing. Net debt improved dramatically from $18.9 billion in 2021 to $2.6 billion in 2023, before rising again to $10.4 billion in 2024 and $10.0 billion in 2025 as the balance sheet grew. American Express returned $7.6 billion to shareholders in 2025 through buybacks and dividends, and announced a planned 16 percent increase to its quarterly dividend in early 2026.
$10.8B
Net income in 2025, up from $10.1B in 2024 and $8.4B in 2023
The premium customer strategy is central to the financial picture. American Express targets high-spending, high-credit-quality cardholders and charges them more in annual fees. The average annual fee per card reached $117 in 2025, up from $103 in 2024 and $92 in 2023. The company added millions of new merchant locations globally in 2025 and saw billed business, the total spending on its cards, grow 8 percent to $1.67 trillion. Credit quality stayed remarkably stable. The rate of loans written off as uncollectable held at 2.3 percent in both 2024 and 2025, and the share of loans more than 30 days past due stayed flat at 1.3 percent.
What is a cobrand card?
A cobrand card is a credit card issued jointly by American Express and a partner company like Delta Air Lines or Marriott. The partner's name appears on the card alongside the American Express logo. Cardholders earn rewards in the partner's loyalty program. American Express earns transaction fees, and the partner gains a way to deepen loyalty with its own customers.
One of the biggest concentration risks sits inside the cobrand portfolio. Delta Air Lines is the single largest strategic partner. The Delta cobrand portfolio alone represented approximately 13 percent of worldwide billed business and approximately 21 percent of worldwide card member loans as of December 31, 2025. The current agreement with Delta runs through the end of 2029. If that relationship were to end or be renegotiated on worse terms, the financial impact would be immediate and substantial. Cobranded cards overall made up 26 percent of worldwide spending and 36 percent of card loans in 2025.
36%
Share of card loans from cobrand cards in 2025, with Delta alone accounting for ~21% of worldwide card member loans
2022
milestone
Spending bounced back hard after the pandemic dip
The pandemic year 2020 cut profits sharply. But by 2022, billed business and revenue surged as travel and entertainment spending recovered. American Express had leaned into premium travel benefits like airport lounge access and dining perks. That bet paid off. The Millennial and Gen Z cardholder cohorts became the company's fastest-growing customer groups, and spending by those cardholders continued growing through 2025.
Several risks are documented in the company's own filings. Merchants in some countries can now add a surcharge specifically for American Express cards or steer customers toward cheaper payment methods. If enough merchants do this, cardholders may start leaving their American Express cards in their wallets, and transaction volumes fall. On the technology side, large tech companies and financial technology firms are building payment platforms and AI-driven tools that could pull customers away. American Express acknowledges that competitors may have lower costs, different revenue streams, and fewer regulatory requirements, which can give them advantages the company cannot easily match. The company also exited Russia and Belarus after the invasion of Ukraine, a reminder that geopolitical events can force an abrupt exit from entire markets. And cybersecurity is a constant threat: the company stores massive amounts of sensitive cardholder data, and a serious breach could damage trust in ways that take years to repair.
What does 'discount rate' mean for merchants?
When a merchant accepts an American Express card, they do not receive the full purchase price. American Express keeps a small percentage, called the discount rate. In 2025 that rate averaged 2.24 percent of billed business. Visa and Mastercard typically charge merchants less, which is why some merchants have historically preferred those networks and why American Express works hard to justify its higher rate through higher-spending customers.
The discount rate has been quietly declining. It was 2.29 percent in 2023, 2.27 percent in 2024, and 2.24 percent in 2025. Each fraction of a point of compression across $1.67 trillion in billed business is a very large number. American Express has been able to offset that pressure with volume growth and rising card fees, but the direction of the rate itself is worth watching closely over time.
American Express now employs approximately 76,800 people worldwide, with more than half of its workforce located outside the United States. The company's 2025 annual colleague survey showed that 91 percent of participating employees said they would recommend it as a great place to work.
$19.2B
Free cash flow 2022
$16.0B
Free cash flow 2025
Cash generation remains substantial but has not returned to its 2022 peak even as revenue grew $19 billion over the same period, reflecting rising rewards costs and investment in benefits.
The Bet
American Express charges merchants more than its competitors and charges cardholders premium annual fees. Both of those things are only sustainable if the cardholders keep spending at levels high enough to make merchants accept the higher cost. The company's entire revenue model assumes that its premium, high-spending customer base keeps growing and keeps spending, particularly the Millennial and Gen Z cohorts it has been actively recruiting. If economic pressure causes those customers to pull back, trade down to lower-fee cards, or shift spending to networks with lower merchant fees, both the discount revenue and the card fee growth that have driven five years of consistent expansion could slow at the same time.
Open question
American Express has grown revenue every year for five straight years, kept credit losses remarkably stable, and built a premium brand that commands higher fees from both merchants and cardholders. But the Delta partnership agreement expires in 2029, the merchant discount rate is drifting lower, and technology competitors are building tools that do not need a physical card network at all. Can American Express keep attracting high-spending younger cardholders fast enough, and keep its premium brand valuable enough to merchants, to offset a slowly declining discount rate and the eventual need to renegotiate its most important partnership?
Compiled · 10-K · FY2025
Partner Relationship Risk
American Express depends heavily on a few major partners like Delta and Marriott for cobranded credit cards. If these partnerships end or get renegotiated with worse terms, the company could lose a huge portion of its business. Cobranded cards made up 26 percent of worldwide spending and 36 percent of card loans in 2025.
Merchant Acceptance Risk
Merchants in some countries can now charge extra fees specifically for American Express cards (called surcharging) or steer customers to other payment methods. This could make cardholders less willing to use American Express cards, which would hurt the company's transaction volumes and revenues.
Cybersecurity and Data Breach Risk
American Express collects and stores massive amounts of sensitive customer payment and account information. A successful cyberattack or data breach could expose this information, disrupt operations, trigger expensive regulatory investigations, and seriously damage the company's reputation and customer trust.
Geographic and Geopolitical Risk
American Express is exposed to major risks from wars, trade disputes, and economic sanctions in countries where it operates. The company already exited Russia and Belarus due to the Ukraine invasion. Travel-related spending, which the company heavily depends on, can be disrupted by geopolitical events and health crises.
Technology and AI Competition Risk
Competitors and large tech companies are rapidly adopting artificial intelligence and new payment technologies that American Express may not be able to match or adopt quickly enough. If competitors build better AI systems or payment platforms, they could take customers and transaction volume away from American Express.
10-K Item 1A · Risk Factors
