American Express buys all of Swisscard, FCA adds BNPL regs | PaymentsSource

American Express this week acquired the 50% of the 26-year-old Swisscard venture that it did not own. The deal, which is expected to close in early 2025, should contribute, albeit modestly, to Amex’s quest to grow its presence outside of the U.S., where it trails Visa and Mastercard.

The card lender bought the Swisscard stake from UBS Group and will be sole owner of the card business, which launched in 1998 as a joint venture between Credit Suisse and Amex. UBS inherited Swisscard from Credit Suisse in 2023 as part of a UBS deal to acquire assets from Credit Suisse, which was in danger of collapse.

UBS has since siphoned off parts of the former Credit Suisse business that did not 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 cards for Amex, Visa and Mastercard in Switzerland. For Amex, the Swisscard deal follows a third-quarter earnings report that beat analysts’ expectations but also showed signs of slower payment growth.

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

“The acquisition of the remainder of Swisscard could help Amex’s core card business if it can convert some of the existing Visa and Mastercard cardholders, and could enhance its acceptance in Switzerland,” said Aaron McPherson, a principal at AFM Consulting, adding Amex’s lack of wide acceptance in Europe compared with Visa and Mastercard is partly due to higher fees, with Visa and Mastercard maintaining an advantage due to the development innovations such as Visa’s Flexible Credential, which enables cardholders to choose between accounts and card types to make payments.

The Swisscard deal could be part of an Amex strategy to compete with these moves from its rivals, according to payment experts.  “The Swisscard seems like a small advantage, however, compared to the broader challenges of competing in a world where cards are increasingly being challenged by newer alternatives.” McPherson said. 

On its face, acquiring full control of Swisscard does nothing to increase American Express’ mass or relevance in Switzerland, according to Eric Grover, a principal at Intrepid Ventures.

“If it can provide greater incentives to use Amex to cardholders and merchants as a result of full control of its acquirer and principal issuer, that may help. But even in a small market like Switzerland, Amex would benefit if it implemented creative issuing and acquiring partnerships to build and extend its network reach.” —John Adams