This story was delivered to Business Insider Intelligence "Payments Briefing" subscribers hours before appearing on Business Insider. To be the first to know, please click here.Amex had a strong quarter inQ4 2018as the firm continues to distance itself from the 2016 sale of its Costco portfolio, which comprised 8% of its billed business and had a multiyear impact on the firm.US billed business ' which is Amex's largest segment, making up 32% of its billed business during the quarter ' grew by 9% year-over-year in Q4 2018. That marks an acceleration from the 8% annual growth the firm saw inQ4 2017, but a slight deceleration sequentially from the segment's 10% annual growth duringQ3 2018.In the firm's Q4 2018 earningscall, Amex CEO and chairman Steve Squeri highlighted four areas the firm has been focusing on since October 2017.Those growth areas include expanding leadership in the premium consumer space, building on its strong position in commercial payments, strengthening its global integrated network, and making Amex an essential part of customers' digital lives.Amex's efforts throughout 2018 to reach a new customer segment and expand its merchant acceptance network continued into Q4 2018, putting the firm on track for a strong year ahead.Amex continued to emphasize rewards in Q4 2018, particularly targeting millennials.Rewards spending ' which has consistently been Amex'slargestsingle expense ' grew by 11% annually to reach $2.5 billion in Q4 2018. The increase in rewards spending reflects Amex's push to drive engagement and spending; one effort includedrevampingits Premier Rewards Gold Card to appeal to millennials by making the rewards structure more food- and travel-centric and adding a new design. This update built on other efforts by the firm to attract new customers, specifically millennials: In the past two years, Amex has bolstered its digital channels,launcheda no-fee cash back card, and partnered with millennial-driven companies like SoulCycle for exclusive offers. Pursuing this customer segment has proven worthwhile for Amex thus far, as it has made up more than half of its acquisitions on the Platinum card alone. Further, investing in rewards can drive spending and cause certain cards to reach primary card status while ultimately increasing overall volume: Three of the top four factors cited by respondents in a Business Insider Intelligencestudyas most important in choosing a primary card were related to rewards.Business cardholders were also a big area of focus for Amex in Q4 2018.Amex launched or continued to build out several products catered toward its business customers during Q4 2018, includingupdatesto its Business Platinum Card ' which will become available in February ' with features that give cardholders access to WeWork memberships and the ability to earn statement credits when they use the card to shop at Dell. And Amexpartneredwith Amazon to launch a no-fee cobrand credit card for US small and medium-sized businesses (SMBs). SMBs, which make up 99% of businesses in the US, are an extremely valuable segment to target, and Amex has acknowledged that: 'The investments we've made in commercial payments are one of the key reasons that SMBs continue to be one of our fastest growing customer segments worldwide,' Squeri noted in the company's earnings call.Amex will continue expanding its merchant acceptance network in 2019 as it pursues parity with Mastercard and Visa.In 2018, Amex added1 millionnew merchants in the US to its merchant network ' for the second year in a row.Initiatives throughout 2018, like SMB programs and partnerships andcutting downits merchant acceptance fees, likely contributed to that uptick in merchant partners throughout the year. Amex uses the fees it charges to fund its reward offerings, but a wider merchant acceptance network could promote increased spending on cards, making it important for the firm to find a balance so that it can continue these initiatives going forward. Subscribe to an All-Access pass to Business Insider Intelligence and gain immediate access to: Content like this delivered straight to your inbox daily Access to 250+ expertly researched reports plus all future reports Forecasts of new and emerging technologies in your industry And more! Learn More SEE ALSO:The Payment Industry Ecosystem: The trend towards digital payments and key players moving marketsJoin the conversation about this story
Click here to read full news..
