American Express: Soon to Surpass Mastercard in US Transactions

by Brian Riley 0


U.S. credit card volumes grew nicely in 2Q, and 2018 will likely be a banner year for credit card transactions.

  • The U.S. credit card processing industry resumed its growth trajectory after a seasonally slow first quarter to reach a record $927 billion in purchase volume over Q2 2018.

  • This represents an almost 10% jump from the figure of $844 billion in Q2 2017 and $846 billion in Q1 2018.

This article in Forbes expects to see a shift between the second largest  network and the third, Mastercard and American Expresss, respectively.

  • Visa remains the undisputed market leader with a market share of over 53% – a figure that should continue to increase, as the company’s credit card payment volumes are growing at a faster rate than the industry.

  • However, a shakeup in the rankings among the four incumbents is also in the cards for the first time in decades, as American Express is closing in on MasterCard’s #2 spot.

Visa delivered $493 billion in transaction volume for 2Q2018, representing a 10.5% increase over 2017.  Mastercard volume hit $202 billion, with an 8% increase.  American Express grew by 10% during the same period, bringing in $195 billion in spend.   Discover carried only $36 billion of the total $927 billion; their growth was 9.0%.

Though American Express and Mastercard are neck-and-neck for the second ranked position, Amex reduced the gap from $9 billion to $7 billion.

  • While MasterCard and Discover have not been able to match Visa’s higher growth rate (which regularly exceeds 10% year-on-year), American Express has reported a growth rate of 10% for each of the last two quarters.

  • This has helped the company nearly close the gap with rival MasterCard.

The positioning shift will likely happen in 1Q19.  A billion dollars in transaction volume will not make much of a shareholder impact, but for American Express, the move will be “Priceless.”

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

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