American Express' incoming CEO may have to fundamentally change how the company makes money, if regulators and the Supreme Court side against it.

Stephen J. Squeri, who will succeed outgoing CEO Ken Chenault next year, must first confront a Supreme Court challenge to Amex's fee policies. Amex is also under pressure from regulators who contend Amex overcharged in U.S. territories.

"The thing that stands out is revenue," said Brian Riley, director of the credit advisory service at Mercator Advisory Group. "The Supreme Court is looking at interchange and related issues and there will be market pressure coming to bear."

Chenault and Squeri didn't address the company's regulatory challenges and the Supreme Court case during Wednesday's earnings call, and Amex did not return a request for comment. Amex forbids retailers that accept Amex cards from recommending consumers use other card networks. Critics say the rules lead to higher fees—Amex's fees are among the highest in the industry—and depress competition.

Kenneth I. Chenault, chairman and chief executive officer of American Express Co.
"Viewing how the marketplace economics are evolving, I didn't want to stick with the status quo," said outgoing CEO Ken Chenault. Bloomberg News

The two executives explained how Amex is recovering from the loss of its Costco card business to Citigroup and general pressure in the cobrand space. Amex has similar deals with Starwood and Marriott up for negotiation soon, and the company said the management change should not affect those talks.

"We're coming out of a period of transition and into a period of growth," Squeri said during the earnings call.

Most recently, Amex has made changes to its small business strategy to counter Square and PayPal, partnered to improve business invoicing and tweaked its mobile technology to challenge personal lending companies.

Squeri said he would work to integrate the company's various digital products and partnerships to provide a comprehensive menu to grow Amex's share in new geographies and build deeper relationships with small to medium sized businesses.

Given the scale and number of partnerships and initiatives, that won't be easy.

"The integration will be challenging, they have to cover a lot of bases and do it globally," Mercator's Riley said.

During Wednesday's earnings call, Chenault characterized Amex's post-Costco recovery as near its conclusion and part of a more general restructuring of its cobrand strategy.

"We decided a few years ago to renew some cobrand and not renew some others," Chenault said during the earnings call. "Those would involve short-term pressure on earnings, but viewing how the marketplace economics are evolving, I didn't want to stick with the status quo."

As Amex's earnings have improved, it's a good time for a transition in leadership, Chenault said.

For the quarter ending Sept. 30, Amex reported revenue of $8.44 billion and $1.50 per share, versus the $8.28 billion and $1.48 EPS expected, according to Thomson Reuters. That compares to the same quarter a year earlier in which Amex reported earnings of $1.20 per share on revenue of $7.44 billion. The company also raised its full-year expectation to between $5.80 and $5.90 per share, higher than the earlier projection of $5.74 per share.

Squeri, Amex's current vice chairman and a 32-year veteran of the company, has been involved with technology strategy for years, dating to the Y2K conversion in 1999 and through crisis such as the September 11, 2001 terrorist attacks (Amex's offices are in Brookfield Place, near the World Trade Center), the 2008 financial downturn and other challenges. Squeri emerged as the top candidate after a five-year search that was part of Amex's succession plan, which considered candidates from inside and outside of the company.

"Technology has always been important to American Express, and we know digital innovation was going to be even more important in the years ahead," Chenault said, adding he incrementally added to Squeri's technology duties. "Under Steve's leadership, tech is the engine that drives almost everything we do today."

Amex has responded to the Costco loss through a focus on mobile services, a strategy that has started to show some results given the coming wave of Internet of Things payment deployments and the expansion of use cases for distributed ledger technology.

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