American Express (AmeEx, Amex, ticker NYSE: AXP) - a global financial services company, hosted in New York. The well-known products of the company are credit cards, expense cards and travelers checks. The company's ordinary shares are traded on the New York Stock Exchange. This is one of 30 Shares, which are included in the Dow Jones Industrial Average. Remarkably, what in 2008 Sberbank of Russia became the leader in the sale of American Express traveller's checks.
Pay by cash or credit card?” – this is a common question nowadays store employees, hotels, restaurants, benzocolon, air ticket offices first began to ask customers only fifty years ago. Over the past half century, the civilized world has practically turned into “cashless society”, and one of the products, who transformed him in such a dramatic way, had an American Express credit card.
In the 1880s, President of American Express, Mr. Fargo, took a trip to Europe for the purpose of rest and was enraged at, that during the whole trip experienced difficulties, related to using letters of credit to get money. Upon returning from a trip, he instructed the head of the transportation department to come up with a better alternative to the letters of credit.. The solution to the problem was the American Express Traveler's Check – first product, invented by American Express.
The invention of traveller's checks, at one time made a small revolution in tourism. So far traveler's checks “American Express” are extremely popular all over the world and allow millions of tourists to travel with confidence, without worrying about the safety of cash. Your signature on the check serves as a guarantee that, that this check can only be used by you. And in case of loss or theft, your checks can be restored anywhere in the world through American Express offices or banks (usually, during 24 hours).
American Express card prototype – like any other credit card – there were travelers checks, invented by the company in 1891 year. By this time, the history of American Express was already forty years old and was full of very interesting events., although initially the founders of the company let their offspring only ten years of life. Exactly for this period was concluded in 1850 year "truce" two American courier services – Wells Fargo & Company и Butterfield, preliminarily bringing each other to the brutal dumping war almost to ruin. By the end of the truce, the compromise-born American Express Company had grown into one of the most famous courier services., that's why the founding fathers decided to extend the life of the company. Truth, the clause of the dissolution agreement still had to be respected: partners sold all the property of the company, but managed to keep its name. The calculation turned out to be correct – American Express's reputation was so impeccable, that after twenty years the new infrastructure of the company consisted of four thousand offices in nineteen states. For clients of the company, forwarded letters via American Express, parcels and envelopes with cash, very fast delivery was guaranteed by the standards of that time, while maintaining complete confidentiality.
However, American Express has a powerful new competitor. – U.S. federal postal service. IN 1864 year she introduced postal orders, which saved people from the need to send real money: the transfer could be cashed at the place of receipt. American Express was very wary of this innovation, since the postal order form was very easy to forge. Only in 1881 year, the new president of the company JC Fargo challenged his subordinates to develop a corporate form of money transfer, which would be tamper-proof. American Express employee Marcellus Berry brilliantly coped with this task., and the company began selling its own postal order forms at a lower, than a competitor, price. These transfers could be cashed in any office of the company.
Truth, American Express did not have branches abroad, so Jay C. Fargo, who went on a trip to Europe in the late 80s, had to use a letter of credit. Returning from a trip, Fargo summoned Berry and informed him of his L / C troubles., money for which could be obtained only in a few capitals, where is the american bank, issued by Fargo letter of credit, had its own branches. “If the president of American Express has such problems with letters of credit, you can imagine, what is it like for an ordinary traveler. – complained Fargo. – We need to do something about this, Marcellus ".
And Marcellus Berry, despite all the vagueness of the task assigned to him, solved it again brilliantly, came up with 1891 financial product, which laid the foundation for the creation of a "society without cash".
Berry developed the concept and design of the traveler's check, which have remained virtually unchanged since then. American Express Traveler's Checks were issued in denominations of $100, $50, $20 And $10. Counterfeit protection was ingeniously simple: buying a check, the client, in the presence of an American Express employee, signed in the upper left corner of the check and then reproduced his signature again when cashing the check.
The start of a new business was quiet and inconspicuous – in the first year the company sold only 248 checks totaling $9120. The main reason for the slow start was, that it was only possible to get money on a check at American Express offices, whose network covered only part of the United States. The company solved the problem very quickly, by concluding contracts with a number of banks and hotels. Already by 1892 year list of institutions, accepting travelers checks, occupied 14 pages of the American Express corporate brochure, and the checks themselves were sold for $483 490. TO 1909 year, the annual sales of traveller's checks reached $23 million.
And although the priority direction for the company remained cargo transportation, American Express took travelers checks more and more seriously, because this product has a very pleasant property for the company: since there was a certain period of time between the day of purchase of the check and the time of its cashing, it worked, that customers are issuing in kind American Express short-term interest-free loan. Naturally, it would be a sin not to take advantage of the opportunity to spin this money. Company, usually, invested in government bonds and – less often – in other securities. (Looking ahead, say, that by the 70s of this century, this "investment fund" was about $1 billion)
During the summer 1914, approximately 150 000 American tourists were confused, when the war engulfed Europe. Many of them found themselves without access to funds. Banks stopped paying on foreign letters of credit and any other form of foreign origin. Panic-stricken travelers lined up at American Express offices. American Express was able to cash all travelers' checks and money orders in full, allowing quick return home for thousands of people. Many of those, who were left able to return home shortly after the decision of American Express and a consortium of nine American banks, about sending 10 USD million in gold to Europe for, so that local banks can fulfill obligations and support foreign projects.
During the war, American Express also provided other services. The company was appointed the official representative of the British government in the supply of aid packages, letters and money to British prisoners of war in Germany. In the end, American Express supplied 150 tons of packages daily to British prisoners in Bulgaria, Germany, Holland, Norway, Switzerland and Turkey.
American Express officially entered the travel business in 1915. For a decade, American Express has been taking tours of Europe, South America, Far East, West Indies and other destinations around the globe. The company has become synonymous with luxury travel following its successful charter in 1922, first round the world four-month cruise (30,000-mile flight of the Cunard liner, with stops in Cuba, Panama, Honolulu, Japan, China, Yave, Singapore, India, Cairo and the Mediterranean).
American Express's focus on travel continued over the next several decades. Sales of checks to travelers and remittances generated income, which justified this direction of the company's activity.
Development of international, especially European tourism, was the simplest and at the same time effective way to increase the money spinning time, since the American traveler took about two weeks to get to Europe. However, Fargo rejected this initiative of his employees., unwilling to engage in business diversification, so the company entered the international tourism market only after his retirement in 1915 year.
American Express's conceptual vision of the travel business was formulated by the new president of the company, Frederick Small: “We cannot be limited to selling a ticket and a traveller's check to a tourist. And even the wires in the port with a bouquet of roses are not enough. We must provide our services to the tourist throughout the journey. ". In accordance with this concept, American Express began to offer travelers a whole package of services.: tour booking, transatlantic cruise and currency exchange at their European offices. As a result, to 1929 year American Express became the largest American travel agency and continued to increase its presence in Europe. However, the outbreak of the Second World War put an end to the tourism business overnight.. However, American Express has managed to survive difficult times thanks to the same traveller's checks, selling them in large numbers to American soldiers. In the midst of the war, Small resigned and Ralph Reid took over the company.. Tourism was the meaning of life for Reed. He loved to travel on a grand scale, loved to communicate with the European elite and boasted of newspaper photos with his own image. In short, Reed was the real leader of a rowdy tribe of American tourists.. Naturally, the tourist business has become a priority post-war direction for American Express. The company began to present itself as a "home away from home" for Americans, traveling in Europe. And this was no exaggeration: in the 50s, for example, the Paris office of American Express was visited daily 12 thousand. American tourists – they received correspondence here, booked tours, cashed traveler's checks and received advice on all issues, associated with their stay abroad.
How Fargo delayed the implementation of money transfers at one time, so Reed was in no hurry to implement the proposed 1946 year plan for the introduction of a new service for clients: by opening a deposit account, they could receive a special card and pay with it their expenses within the limits of the amount available on the deposit, without resorting to cash (in modern terms, customers were offered a debit card).
Meanwhile, the idea of cashless payments using a special card, as they say, was in the air. IN 1950 two businessmen – Frank McNamara and Ralph Schneider unveil Diners Club card to the public. To become a member of Diners Club, had to pay an annual fee of $3. In return, the club member received a card, which allowed the owner to pay restaurant bills, accepting the card, with 10% discount (in other words, Diners Club was a classic example of a discount card). Restaurateurs willingly served cardholders, hoping to cover 10 percent discounts by increasing the clientele. AND, need to say, their calculations were fully justified: to 1955 year, when Diners Club was incorporated, 200 thousand. cardholders were left in restaurants $20 million. The American Hotel Association has also introduced its cards. (American Hotel Association), car rental firms Avis and Hertz and the Gourmet Restaurant Association. Only after that did Ralph Reed decide, that it's time for American Express to do “card” business. In order not to risk, starting a new business from scratch, Reed decided to buy existing companies, dealing with credit card transactions. American Hotel Association became one of the acquisitions of American Express (150 thousand. cards), others – Gourmet (40 thousand. kart).
But, before entering a new market for yourself, American Express has decided to squeeze all of its two advantages, which competitors did not have, – name and experience. Deployed in 1957 year, the marketing campaign exploited the name American Express, presenting your future product, and got, what is called, in the top ten – more 200 thousand. Americans, previously used company traveller's checks, expressed a desire to purchase a card, which was supposed to be brought to the market only in a year. American Express's reputation and extensive connections also played a role.: expressed willingness to cooperate with the company, for example, legendary New York restaurateur Toots Shore, Paris Maxim's and London Dorchester Hotel, who have previously refused all other credit card operators, so as not to damage your image.
In short, to 1 October 1958 of the year, when the purple American Express card was officially presented to the public, More than one stated their readiness to accept it for payment 17 500 service enterprises in America and Europe.
Ralph Reid was optimistic. “We Will Free Americans' Wallets From Many Credit Cards. Great, and at the same time, cash will replace American Express”, – he stated in 1958 year. However, over the next three years, the card business brought only losses to the company., although already in 1959 year, the projected profit should have been $1 million. American Express board member Ralph Owen eloquently articulated the reason for the failed start.: “We made all the mistakes, what could only be done”. Firstly, American Express was simply unable to control the timeliness of payments from 750 thousand. clients. Secondly, trying to automate accounting, the company spent a lot of money on equipment, which in the end turned out to be completely unsuitable for these purposes. But the main problem was the low level of management., which demanded drastic changes. Hill, but, as usual, did not rush to solve pressing problems, and then the board of directors, taking advantage of 1961 the next tourist voyage of the boss, removed him from office. Reed succeeds 54-year-old Howard Clark, who set a course for drastic and seemingly risky changes. On behalf of Clark, one of his subordinates was engaged in bringing the company out of the crisis. – George Waters.
The first measure he proposed – an increase in the annual fee for using a card with $6 to $8 – was greeted with hostility by all members of the board of directors, except Clark. Waters was right: such an increase in the fee did not scare off almost a single client and at the same time allowed to increase the company's revenues by 30%.
Much more serious was the problem with the delay in replenishment by clients of their accounts.. Affected by the acquisition of a large number of insolvent clients from Gourmet and the American Hotel Association. With this, as Fargo used to say, I had to do something. And then Clarke and Waters infringed on the main corporate principle of American Express, according to which the client had to be "cared for and cherished". All cardholders were notified, that after a month's delay in payments, the cards will be canceled.
Farther – more. Clarke and Waters proposed to increase the size of the discount (Award, which were paid to the company by the owners of the establishments, accepting cards) with 3% to 7%. To all objections from the service industry, Clark answered: “And you will provide cardholders with the best possible service. – then you can raise prices and compensate for your losses. People will pay for top-tier service”.
Finally, changes affected the card itself: she changed purple to green, more associated with cash. Plus, the cardinal changes in corporate principles were supported by a brilliant advertising campaign, organized for American Express by Ogilvy, Benson & Mather. As a result, the card acquired one of its most important current characteristics. – it became prestigious to own it.
Having departed from the previous corporate principles and formed new, the company has managed to dramatically increase the number of its customers, playing on the desire of people to possess a prestigious thing. Members of the elite did not consider it shameful to own a card, and the middle class was flattered to a certain extent to join the circle of the elite. However, it would be inappropriate to call American Express clientele "the circle of the elite". After in 1966 American Express started issuing corporate credit cards, the army of her clients increased by an order of magnitude. It was a real breakthrough in building “cashless societies”. By the mid-90s with 38 million American Express cards around the world annually paid for services and goods in the amount of about $162 billion; traveler's checks were sold at $26 billion. In total, this was equivalent to 3% gross national product of the United States.
Website
www.americanexpress.com
