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But not everyone has been wowed by the company's turnaround. Carl Pascarella, CEO of Visa U.S.A., scoffs at American Express as little more than a small-fry compared with his company. That's because Visa puts its brand on nearly 600 million cards that are accepted by more than 14 million merchants around the world, vs. 42.3 million cards and more than 5 million merchants for American Express. "They haven't changed much," Pascarella says of his rival. "Over the past eight or nine years, consumers have been pulling out their Visa card significantly more often than their American Express card."
Pascarella is targeting corporate and small-business markets, where American Express holds a commanding 65% edge. To make inroads, Visa wants to tap the more than $300 billion that U.S. companies spend each year on everything from pencils to planes without using credit cards. "The big opportunity is to displace cash and checks," says Michael Beindorff, Visa's executive vice president for marketing and product management. "It's a market that's there for the taking." Beindorff points out that Visa has already raised its share of the business market from 3% to 20% since 1991, in part by signing up companies that hadn't been using cards.
For its part Amex vows that the wars have just begun. "We are by no means uncorking the champagne bottle," says Chenault, 46, Golub's heir apparent and the architect of the company's comeback in cards. "But we are very much in the game, which is a very different situation from three or four years ago." Chenault still winces at the memory of a focus group back then, when the holder of a rival card that earned free airline miles declared, "I want to go with you guys, but you guys are so stupid that you're not offering this product to me."
That was an epiphany of sorts for a company that had long relied on slogans like "Membership has its privileges." American Express now offers 35 different consumer and business cards, many of them free and co-branded with other companies, up from just five cards a decade ago. "We've introduced more products in a period of 18 months than we did in the past decade," Chenault says.
Many are offshoots of Optima, the company's first credit card. (The venerable green and gold cards are not credit cards that can carry over a balance but charge cards that require payment-in-full each month.) Want to earn discounts on golf lessons or a new set of clubs, for example? The American Express Golf Card, an Optima card issued with Callaway Golf, was designed for that. Or how about dollars off hotel rooms or a chance to rack up frequent-flyer miles? Among other programs, American Express offers Hilton Optima and Delta AirLines Skymiles cards.