American Express — Key Risks
Heavy Reliance on Cobrand Partners Makes American Express Vulnerable to Partnership Losses
American Express depends heavily on relationships with partners like Delta, Marriott, Hilton, and British Airways to attract and retain its most valuable cardholders. Cobrand card portfolios accounted for roughly 26% of worldwide spending and 36% of total card loans as of year-end 2025. Losing or renegotiating even one major partnership on worse terms — as happened with Costco in 2016 — could trigger significant customer attrition and revenue declines.
Merchant Surcharging and Differential Acceptance Threaten the Card Network's Appeal
Merchants in a growing number of jurisdictions are permitted to charge customers extra for using American Express cards, or to quietly steer them toward competing cards. When merchants treat American Express cards worse than Visa or Mastercard, cardholders notice — and may simply switch to a card that works without friction. This dynamic directly threatens spending volumes and the company's ability to charge merchants its discount rate (the fee American Express earns per transaction).
Pressure on Merchant Discount Rates Could Erode a Core Revenue Stream
American Express earns a fee from merchants every time a card is used; this discount revenue is a central pillar of its business model. Regulatory caps on interchange fees (the fees card networks charge) in various countries, combined with competitive pressure from Visa and Mastercard's lower-cost networks, are steadily pushing these rates down. The company acknowledges it may not be able to offset this erosion with higher transaction volumes at newly added merchants.
A Visa/Mastercard Lawsuit Settlement Could Reshape the Competitive Landscape Against American Express
In November 2025, Visa and Mastercard proposed a settlement that would reduce and cap their interchange fees, give merchants more flexibility to surcharge credit card users, and allow merchants to decline certain card categories. If approved, this could trigger broader surcharging of premium cards — a category where American Express is heavily concentrated — and intensify downward pressure on American Express's own discount rates.
Premium Cardholders' Spending Is Especially Sensitive to Economic Downturns
Unlike mass-market card issuers, American Express targets high-spending consumers and businesses. While this strategy has historically produced strong results, it creates a specific vulnerability: small business and corporate clients represented roughly 41% of worldwide spending in 2025, and spending in this segment contracts meaningfully during economic slowdowns. A recession, rising unemployment, or sustained inflation could quickly reduce transaction volumes across the portfolio.
Regulatory Scrutiny Is Intensifying, Especially Around Financial Crimes Compliance
American Express is actively engaging with federal regulators to address deficiencies in its anti-money laundering and counter-terrorism financing (AML/CFT) compliance program. The company is working to identify and remediate weaknesses. Failures or delays in this process could result in significant fines, restrictions on business activities, or reputational damage — outcomes that have materialized at other large financial institutions in similar situations.
Interest Rate Sensitivity Adds Risk to a Growing Lending Business
American Express generated approximately $17.4 billion in net interest income in 2025, a figure that depends on maintaining a healthy spread between what it earns on loans and what it pays on deposits and borrowings. If funding costs rise faster than lending rates — or if high rates suppress borrowing demand — that spread compresses. The company acknowledges it may not be able to fully hedge this exposure or pass costs on to depositors and borrowers in all circumstances.