American Express was not founded to lend money. In March 1850 three rival express operators in Buffalo, New York, Henry Wells, William Fargo and John Butterfield, merged their businesses into a joint-stock association capitalized at 150,000 dollars. Wells was the first president, Fargo the secretary. What they sold was secure carriage: cash, gold, bank notes and stock certificates moved by stagecoach and rail with armed guards, work the United States Post Office would not do. Money orders followed in 1882, and in 1891 an employee named Marcellus Berry produced the Traveler's Cheque after president J.C. Fargo had trouble cashing letters of credit in Europe the year before. The cheque was signed at purchase and countersigned in front of the merchant, and it became the company's main profit engine after federal control of the railroads from December 1917 led to its domestic freight business being folded into the American Railway Express Company in 1918.
The charge card and the premium decision
The first American Express card was issued on October 1, 1958, printed on paper, carrying a 6 dollar annual fee and requiring the balance to be paid in full each month. That last detail is the whole strategy: a charge card is a payment product, not a loan. The first year went badly, with fraud and credit losses heavy enough that the company considered dropping it. Under Howard Clark, chief executive from 1960, it went the other way and repositioned the card as a premium product, raising the merchant discount rate and tightening underwriting. The Gold Card arrived in 1966, the green plastic card in 1969, The Platinum Card in 1984 at 250 dollars a year, and the invitation-only Centurion Card in 1999.
Why the closed loop pays
When someone pays with a Chase Visa card, the fee is divided between Chase as issuer, Visa as network and the merchant's acquiring bank. American Express is all three at once, so it keeps the whole merchant discount. In FY2025 that discount revenue came to 37.4 billion dollars, about 52 percent of the 72.2 billion dollars of total revenues net of interest expense, and averaged 2.24 percent of the 1,669.8 billion dollars card members billed. Net interest income on card member loans added 17.4 billion dollars, annual card fees 10.0 billion dollars and service fees and other revenue 7.5 billion dollars. Holding both sides of the transaction also means the company sees card member spending and merchant sales on the same network, which feeds its underwriting and its targeted offers.
Costco, and what replaced it
The closed loop has a cost: merchants pay more. Costco ended a 16-year exclusive United States card relationship on June 20, 2016 after the two sides failed to agree terms, moved to Citigroup and Visa, and stopped accepting American Express in its warehouses. American Express sold the portfolio to Citi and rebuilt the volume elsewhere, enriching the Platinum and Gold Cards with credits aimed at younger customers and pushing harder on small business acceptance. It worked on the numbers that matter to it: revenue reached 72.2 billion dollars in 2025, net income 10.8 billion dollars, and Millennial and Gen Z customers now account for more than 60 percent of new global consumer accounts.
The acceptance problem and the fee ladder
American Express reached what it calls virtual parity with Visa and Mastercard in the United States through OptBlue, launched in 2014, which lets third-party acquirers sign small merchants on simplified pricing. Internationally the gap is still real, and the company says it added millions of merchant locations in 2025 to reach over a hundred million worldwide. The other half of the strategy is price. In September 2025 it took the United States Consumer and Business Platinum Cards from 695 dollars to 895 dollars and added credits it values at more than 3,500 dollars a year, including 600 dollars for prepaid Fine Hotels + Resorts stays, 400 dollars at Resy restaurants and 300 dollars of digital entertainment. Net card fees rose 18 percent for the year, which is the test the model has to keep passing.
