92. What do you know about credit card companies?

Credit cards have become an important part of our economy. They serve two main functions, each of which has important benefits for consumers. First, they function as instruments of payment that are often more convenient than cash or checks. Second, credit card lending is a source of consumer credit that is often more convenient—though usually more expensive—than other kinds of consumer loans.

You can group credit card companies in two groups with credit card issuer’s credit card networks. Credit card issuer companies are the financial institutions (in most cases, banks) that issue credit cards to consumers and service their accounts. Credit card networks, on the other hand, dictate where credit cards can be used and facilitate the payment process between credit card users, merchants, and credit card issuers.

Visa( 44%), MasterCard (25%), American Express(26%), and Discover(5%) are the four major credit card networks. They handle the worldwide processing of credit card transactions, acting as a gateway between merchants and credit card companies for authorizing and processing each transaction as well as setting the terms of those transactions. The issuer, a term describing the banks, and merchants pay fees to participate in the Visa or MasterCard networks. Visa and MasterCard set and maintain rules governing use of their branded cards.

Credit cards are, for the most part, issued by banks and credit unions. They provide financial institutions with a relatively steady source of revenue, derived from account fees, interest charges, and payment processing fees assessed to merchants. The transactional nature of credit cards also gives issuers the chance to establish ongoing relationships with consumers and upsell them to other products and services.

Two of the world’s largest card networks – American Express and Discover – also issue credit cards. In other words, credit cards on the Amex or Discover network are predominantly issued by American Express and Discover, respectively, while a card on the Visa or MasterCard network could be issued by a company like Capital One, Bank of America, Wells Fargo, but NOT from Visa or MasterCard. Whereas the Visa and MasterCard systems engage many organizations, American Express and Discover are akin to one-stop shops.

The credit/debit card industry has an especially robust barrier to entry. The companies involved operate as a global oligopoly that would take extensive financial resources to disrupt. This barrier to entry is fortified by these companies' virtually universally recognizable brands. Visa and MasterCard hold especially unique positions within this oligopoly.

93. What do you know about American Express?

American Express is a global financial services company, whose principal products and services include charge and credit payment card products along with travel-related services to consumers and businesses across the globe. It's the third largest player in card transaction volumes in the world. after Visa and MasterCard. American Express-- Also known as AMEX. It issues its own credit cards—unlike Visa and MasterCard—and is responsible for its own relationships with retailers. American Express is accepted in more than 130 countries.

.In all of the history of credit cards, AMEX was the first to use plastic in their material instead of paper or cardboard. Over time the company has evolved, providing more services to businesses as well as individuals. It focuses on generating alternative sources of revenue on a global basis in areas such as online and mobile payments and fee-based services. The various products and services are sold globally to diverse customer groups, including consumers, small businesses, mid-sized companies and large corporations through various channels, including direct mail, online applications, targeted direct and third-party sales forces and direct response advertising. American Express operates through four reportable segments:

1. The U.S. Card Services segment offers a wide range of card products and services to consumers and small businesses in the United States and provides travel services to card members and other customers.

2. The International Card Services segment offers proprietary consumer and small business cards outside the United States.

3. The Global Commercial Services segment provides expense management services to companies and organizations worldwide through its global corporate payments and global business travel businesses. Global corporate payments offer a range of expense management solutions to companies worldwide through its corporate card programs and Business-to-Business payment solutions. Global business travel provides globally integrated solutions, both online and offline, as well as through mobile applications, to help organizations manage and optimize their travel investments and service their traveling employees.

The Global Network & Merchant services segment operates a global payments network that processes and settles proprietary and non-proprietary card transactions. It also provides point-of-sale products, multi-channel marketing programs and capabilities, services and data, leveraging the global closed-loop network.