The 1 Critical Secret Behind American Express (AXP) Revenue Engine That Every Investor Must Understand

American Express doesn't just process payments—it prints money through a dual-revenue fortress that would make traditional banks blush.

The Interchange Game: How AmEx Skims the Cream

Every swipe generates interchange fees—merchants pay up to 2.5% per transaction while competitors settle for crumbs. That's not revenue; that's a toll booth on commerce.

Annual Fees: The Subscription Economy Masterclass

Platinum and Gold cards charge up to $695 yearly for... wait for it... the privilege of spending more money. Genius or predatory? Why not both.

The Loan Sharking Side Hustle

Carry a balance? Congratulations—you're now funding AmEx's yacht parties through 20%+ APRs on revolving credit. Traditional banks wish they had this loyalty.

Network Effects: The Ultimate Moat

Premium customers attract premium merchants who attract more premium customers. It's a virtuous cycle that keeps Visa and Mastercard playing catch-up in the high-stakes game.

AmEx proves Wall Street's oldest rule: the real money isn't in moving value—it's in taxing everyone who tries to.

Image source. Getty Images.

Targeting an affluent customer base

American Express offers what are known as charge cards. Its cardholders are typically required to pay their balances in full each month. Therefore, American Express doesn't necessarily depend as much as its peers do on making money from interest payments.

Instead, American Express gains when its customers spend a lot. That's because it collects what's called discount revenue from the 160 million merchant locations that accept these cards. This totaled $9.4 billion in the latest quarter (second quarter of 2025 ended June 30).

This is a powerful brand in the industry. Its premium card offerings provide valuable perks and rewards to members. This naturally attracts an affluent customer base, benefiting the business greatly.

American Express also rakes in fee revenue

The company's most popular cards, like the Platinum and the Gold, carry annual fees of $695 and $325, respectively. American Express collected $2.5 billion just in the most recent quarter from the fees it charges customers to have its credit cards. This is another meaningful money-making activity.

Combined, fee and discount revenue made up 66% of the company's total in Q2.