American Express buys all of Swisscard, FCA adds BNPL regulations | Source of payments

American Express this week acquired the 50% of the 26-year-old Swisscard venture it didn’t own. The deal, which is expected to close in early 2025, is expected to contribute, albeit modestly, to Amex’s attempt to increase its presence outside the US, where it lags behind Visa and Mastercard.

The card lender bought Swisscard’s stake from UBS Group and will be the sole owner of the cards business, launched in 1998 as a joint venture between Credit Suisse and Amex. UBS inherited Swisscard from Credit Suisse in 2023 as part of an agreement with UBS acquiring assets from Credit Suisse, which was in danger of collapsing.

Since then, UBS has spun off parts of the former Credit Suisse business that didn’t fit its strategy, including a securities unit in China, an insurance-oriented investment product and a $2 billion real estate fund. Amex, which did not respond to a request for comment, plans to expand its franchise in Switzerland.

Swisscard will continue to issue Amex, Visa and Mastercard cards in Switzerland. For Amex, the Swisscard agreement follows a third quarter earnings report that exceeded analysts’ expectations, but also showed signs of slower payments growth.

Amex’s strategy includes growing its international presence, including products for restaurants and small businesses, although analysts say Amex’s position in Europe will make this a challenge. Amex’s market share in Europe ranges from 1% to around 10% depending on the country, according to Statist. Amex’s market share in Switzerland is around 20%, according to Ask the wonder.

“Acquiring the remainder of Swisscard could help Amex’s core card business if it can convert some of its current Visa and Mastercard cardholders, and could increase its acceptance in Switzerland,” said Aaron McPherson, director of AFM Consulting, adding that the Lack of widespread acceptance in Europe compared to Visa and Mastercard is in part due to higher fees, with Visa and Mastercard maintaining an advantage due to development innovations such as Visa Flexible Credentialwhich allows cardholders to choose between accounts and card types to make payments.

The deal with Swisscard could be part of a strategy by Amex to compete with such initiatives from its rivals, according to payments experts. “However, Swisscard appears to be a small advantage compared to the broader challenges of competing in a world where cards are increasingly challenged by new alternatives.” McPherson said.

At first glance, acquiring full control of Swisscard does nothing to increase the mass or relevance of American Express in Switzerland, according to Eric Grover, director of Intrepid Ventures.

“If it can provide greater incentives to use Amex for cardholders and merchants as a result of full control of its acquirer and primary issuer, that could help. But even in a small market like Switzerland, Amex would benefit from implementing creative issuance and acquisition partnerships to build and extend the reach of its network.” –John Adams