american express changes its business concept in europe

What Are the Impacts of Change

Regulations imposed by the EU Payments Package were set in place to provide interchange fee caps, separate payment schemes from processing operations, regulate requirements for network access, and positively affect the pan-European licensing agreements. The aim and guiding principle of the EU PP was to level the playing field and provide customers with both security and increased options.

However, in the case of American Express, these regulations have also rendered the company's bank licensing business unviable in the European Union. 

What the fee

These changes to EU regulations have, among other things, made it impossible for Amex to cooperate exclusively with one bank in each country.

There is also the ceiling of 5% on credit card charges that had also significantly affected American Express' EU business. For example, Amex fees for Cyprus were nearer to 8% before the Payments Package was enforced. 


Source: AlJazeera

2019 Marks the concept change of Amex in Europe

American Express was therefore no longer able to compete with Visa and MasterCard when it came to bank cooperation. Thus, the international giant made a difficult decision and elected to exit all of its bank licensing arrangements in the European Union. This means that they have terminated all licenses with its existing EU partners, stopped issuing new cards and are in the final stages of the process of closing down all operations directly related to bank licensing.

Over the course of 2019, American Express credit cards issued under independent operator agreements will be rendered invalid in all countries of the European Union. Various banks that have up to now had exclusive licensing contracts with American Express have already responded accordingly and provided their clients with the opportunity to switch to other card brands.

Not a 100% Exit

The card company is still open to dealing directly with interested individuals and has also opted to maintain a physical presence in several European Union countries, operating its proprietary businesses or joint ventures, including France, one of its most lucrative markets. 

Card issuing, both commercial and consumer, as well as euro and dollar-denominated, and their popular Amex business travel cards through agent banks is also an option. American Express will also continue to operate their European merchant network. 

While the Payments Package was stated as the reason for American Express withdrawing from the current operational model in the EU market, various financial analysts have hinted that pressure from alternative payment methods and providers may have also been a pertinent factor. 

Overall, the American Express exit has significantly increased business and profit for its main competitors. Visa and Mastercard may have seen their customer numbers swell due to the switch from Amex to their own cards, but American Express is set to remain a significant presence in the EU financial market and continue to shape the financial landscape in the years to come.

The strong presence of Amex

When American Express came to Europe, they formed a strong presence with a fully rounded story. It had many benefits for consumers but it also created a sense of reliability and security for them and that is why people become so attached to the brand itself. That is not just a part of clever and strategic marketing, but proven operational excellence that drove the whole success. 

American Express franchise had a truly strong and presence in Croatia ever since 1972. Peter Wright, former president of the American Express Global Network Services created the company’s business model inspired by Croatia’s success in Amex business, which proves the dominant position the brand had in Croatia. Wright also always praised Croatia as being highly innovative

These are some of the American Express’ timeline highlights in Croatia that by far showed this innovative spirit:

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Everyone who worked on the American Express franchise has many great memories about it and the whole brand. Two of them are our Andrea Solar, Key Account Manager, and Anita Marceković, Project Manager. Anita and Andrea remember the great times and have many stories and anecdotes to tell. They both remember the visits of American Express presidents to Croatia – Harvey Golub and Ken Chenault who, they say, always left the country with high praise. 

Anita Marceković

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"I would like to emphasize that I am extremely proud of all the years I have spent working for American Express in Croatia. Especially, I am grateful for being chosen for the scholarship, and been one of the few employees to acquire a Diploma in management at OUBS, London.  Furthermore, already mentioned Start Card, as the first electronic AMEX card, was my idea and my first successful project. For many years Zagreb office has been the best and most innovative franchise, globally, with very valuable and highly motivated employees. Frequent trips, annual family gatherings, regular sporting events and a numerous other benefits that the company has provided to us, have linked many of us on the private level as well, so the memories of these productive, yet fun times, remains in every one for us, as well as the sadness for loosing this beloved Brand."

Andrea Solar

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"A big part of my working life has been linked to American Express and witnessing the cards being withdrawn from the Croatian market provokes sentimental feelings. I participated in many interesting and innovative projects, which were interesting to work on, but also made me feel proud to be a part of card business history and all the changes technology brought. It is a long way from imprinters to HCE and payment with mobile phones, but the evolution was a fun ride. It was also great to have had the opportunity to work on the launch of American Express card issuing business in Slovakia. Sadly, as the Key Account Manager for VUB today, I also played a role in its closure."

Here are some of their sentimental photos back from the Amex days: