The American Express Company (AMEX) is making significant moves to capture a greater share of the premium credit card market in Jamaica as it looks to expand its international presence, particularly in Latin America and the Caribbean.
Amex entered the Jamaican market in August with an exclusive partnership with the Bank of Nova Scotia Jamaica Limited (BNSJ) for the issuance of cards and has been working with the National Commercial Bank of Jamaica Limited (NBCJ) to upgrade its payments network to accept the credit card.
Since then, NCBJ had 12,000 point of sale (POS) machines enabled at the end of August which were able to accept the Amex card under the first phase of a multiphase approach, while BNSJ is currently working on a phased basis to update more of its POS machines to accept the credit card. NCBJ controls an estimated 70 per cent of the 50,085 POS terminals issued in Jamaica, with BNSJ being the second largest with regards to POS reach.
"At NCB, we are committed to delivering world-class experiences to our merchants. Understanding the monumental influence and trust that American Express carries globally, it was imperative for us to integrate this payment powerhouse into our various suite of merchant solutions. With Jamaica's economy deeply rooted in tourism, our aim is clear: offer both our international guests and local American Express card members a seamless transactional experience right here on our beautiful island," said Danielle Cameron Duncan, vice-president of the Payments and Digital Channels Division at NCBJ in a recent press release.
There were 39.4 million transactions which happened on Jamaican dollar (JMD) credit cards in 2022 valued at $889.16 billion, according to Bank of Jamaica data. There were 4.66 million transactions done on United States dollar (USD) credit cards in 2022 valued at US$995.93 million. However, there were only 3,585,655 JMD credit cards compared to 4.93 million debit cards, while there were 24,424 USD credit cards and 35,887 dual currency credit cards. There were $3.64 trillion electronic transactions processed in 2022, with 54.55 per cent being done by debit cards.
Amex earned 5.50 per cent or US$2.92 billion of its US$52.86 billion in revenue during 2022 from Latin America, Canada, and the Caribbean (LACC), with US$500 million or 4.23 per cent of its pre-tax profit from the region. This exceeded the US$2.82 billion in revenue for 2019, but was slightly below the US$903 million in pre-tax profit.
At a Scotia Group Jamaica Limited press briefing on September 11, Perrin Gayle, head of retail Banking for Scotiabank Caribbean North and Central Region, noted that there was significant interest in the new offering, which is the Platinum Amex card. He noted that it was geared towards customers who are into travel and lifestyle.
The Amex Platinum card carries a $78,500 primary fee in Jamaica and is currently being issued by Scotiabank in Barbados, The Bahamas, Cayman Islands, Turks and Caicos, and Trinidad and Tobago. Scotiabank is also Amex's partner bank in the Dominican Republic and Uruguay, while Republic Bank and Credomatic are the other major partner banks in the Eastern Caribbean and Central America.
Apart from gaining access to different airport lounges and other global offers, select merchants which have been brought on board as part of the value proposition in Jamaica includes the Hyatt Rose Hall hotels, Golden Eye, Strawberry Hill, Fromage, Regency Bar & Lounge, and S Hotel Jamaica.
"Scotiabank merchants started accepting the American Express card on August 1st, 2023. We're updating the terminals on a phased basis, and we expect that to be completed in the next few weeks. The locations that will be accepting the cards will have proper signage. So cardholders will be assured as to where those cards will be accepted. Scotiabank is the second largest acquirer of credit cards in the country. Simultaneously, with the updating of the terminals to accept the American Express card, we're also converting to a new processing platform which will increase capabilities such as self-reporting for the merchants and also allow us to add new products to our point-of-sale network," said BNSJ Senior Vice-President Morris Nelson at the briefing.
When asked by the Business Observer if there were other commercial banks whose POS networks were being upgraded to accept the credit card, Amex replied, "We can confirm we are working with NCB in Jamaica and with Caribbean Credit Card Corporation third parties' banks in 7 Caribbean Markets (Anguilla, Antigua and Barbuda, Grenada, Guyana, Saint Kitts and Nevis, Saint Lucia and Saint Vincent and the Grenadines). American Express has coverage in more than 24 countries in Latin America and the Caribbean. We don't disclose on future plans neither in progress."
Amex also partnered with Interactive Brokers LLC (IBKR) to offer non-US resident customers in Latin America and the Caribbean (excluding US Virgin Islands and Puerto Rico) with a net liquidation value of US$50,000 the ability to apply for the Amex Gold or Platinum cards. IBKR customers who are approved would also be able to pay their monthly statements directly from their IBKR accounts if they so choose. The Gold Card carries an annual fee of US$300 while the Platinum Card carries a US$795 annual fee.
"We value all our partnerships as they allow us to keep backing our customers while providing the best experience every day. In this case, the agreement you mention with Interactive Brokers applies only in the United States for customers that have certified assets in that market. We don't comment on partnerships to come, but you can be sure we will communicate properly when the time comes," Amex said in response to queries about other partnerships in the region.
Amex saw a 17 per cent jump in total revenue net of interest expense to US$29.34 billion in the first half of 2023, with consolidated net profit slightly dipping two per cent to US$3.99 billion. Amex paid US$1.20 in dividends relative to the US$5.29 in earnings per share (EPS).
Total assets were up seven per cent to US$244.90 billion, with cash and cash equivalents at US$42.96 billion, while total liabilities and shareholders equity closed June at US$218.20 billion and US$26.70 billion, respectively. AMEX's stock (AXP) price is up four per cent year to date at US$154.39, which gave it a market capitalisation of US$113.70 billion as of Tuesday.
Amex's third-quarter earnings are to be released on October 20 before the market opens with some analysts expecting US$15.37 billion in revenue and an EPS of US$2.98. Amex is both an issuer and processor of credit cards, which means they issue the cards to clients with some partner banks in different jurisdictions and also processes every transaction on the AMEX network.
"If I look at this, I would say that, you know, international is back probably even a little quicker than we had thought within our three-year horizon. I think millennials are playing out even better than what we had thought, both from an acquisition perspective and a spending perspective," said Amex Chairman and CEO Stephen Squeri during the company's second-quarter earnings call.