Good afternoon, and welcome to our 1st financial community meeting of the year. We've had a debate whether we should give those of you who have come a free Centurion card, but we're not sure that was passed bank holding company rules. So here is today's agenda. I'm going to begin by covering our 2013 financials, including our business metrics and strong relative performance. Now one element of our successful performance is our spend centric model.
And I'll spend some time on how the advantages of our model contributed to our top line growth and how I see this potentially benefiting our future growth prospects. I'll then share some of the businesses and initiatives that I expect to drive our growth over the moderate to long term. Opportunities that have the potential for both significant scale and attractive economics. Now one driver of our growth for several years has been small business. By identifying the unique needs of small businesses, we've been able to successfully develop and offer products, services and expertise that help small business customers manage their expenses, improve their cash flow and grow their businesses.
Today, we'll look at our small business activities from both sides of our closed loop model, our small business card members and our small merchants. Susan Sabat, who led and successfully built our open business for over 10 years before recently being named President of Global Corporate Payments, will take you through our strategy, results and growth plans for our small business portfolio in the U. S. And a number of international markets. Andre Williams, President of Global Merchant Services will take you through the new channels we're building for acquiring smaller local merchants.
While we have strong penetration among large merchants in retail, T and E and everyday spend, small merchants represent our greatest opportunity for expanded coverage. Now, Anre will discuss a number of initiatives and partnerships we're using to enhance our value proposition for small merchants and strengthen our global footprint in this segment. We'll then leave time as always for any questions you may have on these or any other topics. So let me get right to our financial results. I believe 2013 was a strong year for our financial performance.
Despite modest global economic growth, we grew revenues by 5% on an FX adjusted basis for the full year with stronger momentum in the latter half of the year. Now adjusting our 20 12 EPS for the 3 items we reported in the Q4 of that year, are restructuring reserve, our membership rewards estimation enhancement and a charge for card member reimbursements. Our adjusted EPS grew by 11%. Our return on average equity for the year was 28 percent. And as you might recall back at this meeting a year ago, I took you through several short term P and L scenarios.
These scenarios gave hypothetical examples of how we might be able to achieve strong EPS growth even with revenue growth below our 8% target. The scenario show that by varying our revenue, expense and payout assumptions, there were several possible ways of generating good EPS growth. I thought it would be useful to show how our full year results fit against these scenarios that we shared with you last February. We start with the 4% revenue growth we reported for the year. We then add the positive benefit of our OpEx initiative, which had us coming in much better than our goal of less than 3% growth.
Now lowering our growth rate were M and P and rewards. Our focus on acquiring and retaining card members led to a growth rate here that slightly outpaced revenues. Now the impact of credit netted to 0 due to our smaller reserve releases in the current year offset by lower write offs from continued credit improvements. Taxes were a net drag in our growth performance, given our higher tax rate this year. The final driver was share repurchases, which provided a 500 basis point lift to EPS.
In sum, this led to an 11% growth in adjusted EPS for the year, just slightly below our long term on average and over time target, but still more than double the rate of our revenue growth. Against the backdrop of a slow growth competitive environment, our compounded annual EPS growth over the last 3 years has met our on average and over time target. Now as I've said to our organization, I want us to be a growth company in a slow growth environment. Now I believe we have and we have shown the flexibility to drive appropriate bottom line performance for our shareholders, while investing in the future, even with slower revenue growth. Our financial performance was driven by the continued strength of our business metrics.
Our billings growth on both a reported and FX adjusted basis strengthened over the course of 2013 and remained strong on a relative basis as you'll see in a moment. Cards in force continued to grow steadily, reflecting the continued strength of our brand, our increasing global relevance and our commitment to providing premium value and service to our customers. We saw modest positive growth in our loan balances for the year with our focus on premium lending serving to drive not just loans, but billings as well. This growth rate also outperformed most of our peers. Our premium lending strategy also contributed to our credit metrics remaining at historic lows, while also being the best in the industry.
Now when looking at some of our metrics in-depth, up first is billings by region. U. S. Growth built well during the year as did Asia Pacific. Latin America had good growth for the year, while Europe continues to see a slower rate of growth given their generally weaker economic environment.
Now looking at billings by network in the U. S, our credit and charge spending grew at approximately the same level as Visa and Mastercard during 2013. As you can see, one of our higher growing sectors is small business, which you'll hear about in a few minutes. Globally, our billings growth has been a bit slower than that of Visa and Mastercard given their greater mix of spending in higher growth countries outside of the United States. As a reminder, Visa's numbers do not include Visa Europe, which has been growing more slowly over the last several years.
Against large card issuers, we continue to do well. On a billings basis, that is more than double that of our nearest competitor. We continue to generate 1 of the highest organic growth rates of the issuers shown here. For card member balances, our peer situation is reversed. In terms of loans, we have one of the smaller portfolios among major issuers.
Now as I said earlier, while we've generated consistent positive growth over the last 2 plus years, the other large issuers except for Discover are still approximately flat or negative. This represents an improvement for the more significant declines of the last 2 years, but it's still a major challenge given that their models remain dependent on balances to generate revenues. Now when looking at revenue growth by quarter, over the past year, there have been some ins and outs among our peers due to companies that they purchased. Generally, you can see that we continue to out pace the revenue performance of other large U. S.
Card issuers. Now as we saw on the previous slide, while some peers have been able to grow billings at a good rate, this has not been translated into revenue growth because of their Lend based models. Now let me cover a few other metrics that were also meaningful to our results and to our growth strategy. Now as I mentioned earlier, our write off rates continue to be the best in the industry. Our credit remains well controlled and our risk management capabilities provide us with a core advantage as we continue to advance our premium lending strategy.
Since data breaches and fraud have been such active topics over the last few months, I thought I'd share a relative performance metric with you. Now 2013 data we don't have yet, but as you can see through 2012, our fraud loss rates were half the rate of both Visa and Mastercard. Now this represents substantial savings for us, but it also provides significant benefit to merchants and card members who might otherwise have to deal with problems at the point of sale. We obviously don't want our customers disrupted and they don't want their customers disrupted at the point of sale. Now we put a lot of investment into this area over the years and the returns here are pretty evident.
Now one of the benefits of our closed loop network is that with access to both merchant and card member data, we can act more quickly than other networks and issuers to identify and stop instances of fraud before they build to substantial levels. The direct relationships we've built with merchants allow us to work together to appropriately gather data, analyze patterns that we can then use to help merchants control their losses, not just on Amex products, but across their entire portfolio. We often find that merchants who take full advantage of our fraud prevention capabilities have the best outcomes. Our knowledge of card member habits and history also helps us quickly identify out of pattern charges and it does minimize problems for our customers and our merchants. Our fraud and technology teams work together to ensure that our models and controls are among the strongest in the industry.
So that fraudsters consider going elsewhere to conduct their activities. Another important metric impacting our performance was operating expenses. After 2 years of high growth due to historic levels of investment spending and in light of the slow growth environment, we committed to hold our annual OpEx growth to 3% or less for 20132014. Now helped by our restructuring actions and our ongoing shift to online servicing in card and travel. We were able to hold our adjusted OpEx growth flat last year, while still investing appropriately in key expense areas such as control and compliance and infrastructure.
Across the company, we remain committed to holding our operating expense growth to less than 3% for 2014 consistent with our stated goal. Our OpEx performance allowed us to fund a slightly higher level of M and P expense in 2013. While more cautious during the earlier quarters, our performance allowed us to invest and grow our M and P initiatives during the latter half of the year by over 10%. Now we believe this level of investment is appropriate for supporting our growth plans across our range of new and existing businesses, both in the U. S.
And around the world. Now some of the variation you see in this spending over time is the direct result of our practice of using P and L benefits to advance our growth strategy. As I've told you before, our list of attractive growth opportunities each year generally exceeds our funding sources. In any given year as the company does well, we look to fund more of those opportunities. And when we have discrete benefits such as the Visa, Mastercard settlement, we've chosen to reinvest a significant portion of these funds back into growth investments.
Now given the gain, we would expect to recognize upon the closing of our business travel joint venture later this year, we would expect to use a substantial portion of this benefit to fund a higher level of investment. Now 2 of our most promising growth initiatives for the moderate to long term continue to accelerate their customer acquisition in 2013. Loyalty Partners, the loyalty coalition company we acquired in 2011 continues to generate exceptional growth in customers. Over the last 2 years, we've accelerated the expansion of our base, which is now up 75% to over 60,000,000 collectors. Helped by our merchant relationships, we launched a significant expansion in India and also launched our Payback program in Mexico in the latter half of twenty twelve.
Just last week, we announced the launch of Payback in Italy with key founding partners such as Alitalia, Carrefour Supermarkets and Esso Gas Stations. We believe there is substantial opportunity in this business. And our goal over the moderate term is to launch the program in 1 or 2 markets a year. We also continue to make strong progress in acquiring customers for our newer payment products, including our serve and bluebird accounts. Dan Schulman took you through our growth plans during the presentation in August and our progress has continued.
And while we're still in the very early stages here, we've now added over 7,000,000 customers on a cumulative basis since inception across enterprise growth and our acquisition trend has been strong. We believe we have the best value proposition in the marketplace for reloadable prepaid. As a result, our goal is to have actively engaged customers driving higher levels of retention, load, spending and discount revenue. Now one important metric is that 90% of the customers we've acquired are either completely product. When we established enterprise growth several years ago, our intent was to use alternative payments as a means of broadening our base of customers and that's clearly what we're seeing.
We believe reloadable prepaid along with loyalty partner both offer substantial opportunities for moderate to long term growth. They're both currently building good scale and customers, but to eventually realize their full economic potential. We'll have to retain these customers and fully engage them. As these businesses began accelerating their customer growth and supporting their business cases, we reallocated a portion of our investment funds to help accelerate their expansion. We believe strongly in both of these opportunities and as I'll talk about in a few minutes, we believe they can generate profitable scale while broadening our customer base.
Another element of our 2013 financial performance was our strong capital position. In each of the last three years, given lower capital needs to support our business growth, we've exceeded our on average and overtime objective of returning more than 50% of the capital we generate to shareholders. And we've done so while maintaining one of the strongest capital ratios among large bank holding companies. As you can see, our payout ratio is among the best among both issuers and networks. We're committed to providing value to our shareholders.
And I believe we've done a very good job at appropriately balancing our internal investment needs to sustain long term growth, meeting our commitment to investors and maintaining strong capital ratios. Another essential constituent is our customer. Providing exceptional service is a hallmark of our brand and is a key competitive advantage. Our recommend to a friend score among card members improved by almost 40% over the last 4 years and is evidence of the commitment of our customer care professionals and the entire organization to exceeding the expectations of all of our customers. Satisfied customers are engaged customers and this translates directly to our bottom line in a number of ways.
Now one of the most significant is our ability to retain customers. As you know, the economic benefits of a loyal customer base are far reaching, higher spending, lower credit losses and lower customer acquisition costs. Our product value propositions along with our service earn us the loyalty of our customers and we continually invest in both because we want to ensure that we sustain this loyalty. For all of the talk among competitors about the inroads they're making in the premium segment and with transactors, we've not seen it reflected in our customer retention. Among these segments, our franchise is very strong and we're investing to ensure it remains so.
Now one driver that clearly impacts our retention and engagement of high spending card members is rewards. Rewards is a major component of our value proposition and a significant competitive advantage. That will also of course is a large expense item. Now I've shared the benefits with you before. Rewards make a major difference in our business model.
But I thought I'd share some metrics today that illustrate the overall economic value that we realize through customer engagement. As we have diversified our rewards, more of our customers have taken advantage of these broader redemption options. Along with more choice, we've also made it far more convenient for card members to use their points, whether it's pay for their taxis right at the point of sale or to pay with points on our mobile app. As a result, we've seen steady growth in the number of card members redeeming even as we've continued to grow our base. The engagement of redeemers has clear benefit to Their annual spend is 5 times that of MR enrollees who have never redeemed.
We estimate that we have a greater share of their credit and charge spending across all of the card products they carry. And our retention rate is 30% better than it is for non redeemers. Now we've worked hard to make MR a relevant benefit for proprietary card members around the world. This has added to our cost base over time, but as I told you before, our objective is not to minimize our reward costs, but to maximize our overall financial performance. Other issuers try to copy our success, but the competitive programs we've seen just don't measure up.
What's important is, as I look at our results for 20 13, I believe they were significant and I'm proud of our performance. Even with moderate levels of revenue growth, we were able to generate good bottom line results and we did so while investing substantially in key growth opportunities. We controlled expenses appropriately, improving the overall efficiency of our cost base while fulfilling our commitment to appropriately expand key investment areas such as control and compliance. We served our customers well, enhancing the value of our products, improving their satisfaction and meeting their needs across multiple channels. And we generated strong value for our investors while maintaining strong capital levels.
While our leadership team does of course plan for and execute against short term goals, we always do so within the context of our moderate to long term growth objectives. We choose to work at a company that's 164 years old and with that comes an obligation to appropriately balance our business and investment plans across all time horizons. My next two topics focus on the revenue and growth opportunities we see within the payments industry over the moderate to longer term. So let me start with a look at our revenue performance to set the stage. Over the last several years as the global economy recovered from the financial crisis, so too did our revenue growth.
But today even 4 years out, the environment is far from robust requiring many large companies to adapt their strategies. Relative to other card issuers, our position is strong due to the core advantages of our spend centric business model. As you can see, growth in revolving credit across the industry remains quite low. Consumers appetite for debt has not yet returned and some believe this change in behavior will be with us for a long time. But even looking back before the recession, You can see that demand for revolving credit varied quite a bit year over year.
From 2,002 to 2,008, the average annual growth for the industry was 5%, a reasonable growth rate, but below the more robust rates we saw right before the crisis. Over the same period, charge and credit spending was sustained at a higher growth rate overall and varied generally at a far less of a level. Both before and after the crisis, the average growth rate for spending stayed strong. Now looking at these two metrics side by side, it's easy to see what part of the card issuing business you want to be in when it comes to potential revenue growth. Now there are clearly attractive opportunities within the premium lending segment.
We continue to invest in this area and our goal is to responsibly capture our fair share of lending opportunities. Premium lending is one avenue of growth for us, but our core card business remains focused on the right side of this chart, on the opportunity in spending. Now contrasting our revenue performance over the last 4 years with that of our percent revenue growth over the last 3 years. The revenue of our issuing competitors remain dependent on the demand for revolving balances, leading to an overall decline in revenues by 2% since 2010. The numbers below the charts show the proportion of overall revenues coming from net interest income.
Our percentage has gone from 17% in 2010 down to 15% last year, while our card issuing peers had their percentage increase from 75% to 76% over the same time. As you can see, even as we've outperformed other large issuers in growing loan balances over the last few years, our higher growth in billings served to lower our proportion of net interest income. Now let me remind you, similar to what I said about write off rates, our goal is not to minimize net interest income, but to maximize our economics from growth opportunities that fit our global strategy. Over the same time, while our net interest revenue ratio dropped slightly, our lend based peers moved up a bit even as loan levels fell across the industry. Now I clearly understand why these issuers say they want higher levels of spend and more transactors.
What's less clear is how they do it in a meaningful way given their legacy dependence on balances to drive revenues and the 1,000,000,000 of dollars of card loans in their portfolios today. Our core card businesses have successfully capitalized on this billings opportunity over the last several years. And I'm confident we have the appropriate plans in place to generate sustainable growth in our card business. We remain committed to our on average and over time targets, including our 8% plus revenue objective, which I continue to believe is appropriate. As I mentioned earlier, as we generated very good momentum in our core card businesses and recognize the larger term opportunity and loyalty partner and reloadable prepaid, we shifted our investment spending to support these businesses.
This led us to reduce the investment level in a number of our smaller fee based revenue businesses. Now one outcome of this trade off along with the new JV structure planned for business travel, which will deconsolidate these revenues and lower our absolute level of travel consulting fees is that the timeline for achieving our 2014 run rate target of $3,000,000,000 for fee revenues has now shifted and we will not hit this specific goal in the current year. The other outcome is that we are in a stronger position to grow both our core businesses and 2 promising growth initiatives over the medium to long term. Our opportunities are playing out differently than I thought when we exited the financial crisis in 2010, which is when I set our fee revenue target. But because of the actions that we've taken over the last several years, I'm even more confident in our growth prospects.
And looking at our revenue growth opportunities, one significant contributor will continue to be our core card in our business. Our new card acquisition efforts have become more effective at successfully identifying, targeting and approving high spending prospects across our charge, co brand and proprietary lending products. For example, the first year spending of new consumer and small business card members acquired globally in 2013 is expected to be 7% higher than the card members brought on in 2012. This is now the 4th year in a row that we've driven positive growth in this metric. I think what's important is that our success in identifying high spending card members has contributed to growth in our average spend numbers.
Average spending across our proprietary base continues to be about 4 times the level of Visa cardholders and 5 times that of Mastercard. This metric and the corresponding value we bring to merchants through these card members is a key driver of our premium economics. Even as we've successfully grown our card member base over many years, the affluent segment continues to offer us substantial growth potential. Within the U. S, affluent card member spending average is 6 times that of all other card members and has been outpacing the overall growth of our base.
We've been in the affluent space for a long time and as you've seen, we've been able to sustain the growth in our core consumer business. Despite increased competition for affluent spenders, we've generated strong growth in this business year in and year out. And given the breadth of our capabilities and the strong potential for future growth across consumer spending, this core segment stays well up on our list of attractive opportunities. Other segments within our core card business also offer substantial opportunity. Now Susan and Anre will focus on small business, so let me cover the other customer segments.
Within the U. S, our middle market and large corporate products have outperformed in both traditional corporate card spending as well as B2B products. Our ongoing investment in digital capabilities, our value propositions in sales force have allowed us to deepen our relationships with existing clients, while continuing to bring on new clients each year. Because of higher growth rates in a number of major economies outside of the U. S, our international businesses received a higher proportion of investments over the last several years.
Those investments are clearly paying back, generating bill business growth of 10% helped by the launch of new products and channels and the signing of new corporate and merchant accounts. We are realizing the substantial growth potential that exists across international by using the full range of our assets. Beyond the success of our traditional proprietary card business, we also have broader opportunities. Our G and S partnerships have driven substantial billings growth for us over the last several years, particularly in key countries such as China and Brazil. Last year, we added our 5th partner in Africa with the signing of Equity Bank, the largest bank in East Africa, which will cover the countries of Kenya, Uganda and Tanzania.
While our new signings over the last several years have focused on international partners, In 2013, we added 2 large respected U. S. Partners to our portfolio, Wells Fargo and U. S. Bank.
Our common objective across all of G and S is to assist our bank partners in segmenting and targeting their high spending products for Amex branded products. We help them develop superior value propositions and service standards for these customers and prospects. And we deepen their relationship with existing customers, while also attracting new customers into their franchise. Now China is just one example of the growth potential of our G and S model. Over the last several years, we've signed issuing partners with most of the largest banks in China.
Now I've met personally with the heads of these banks and their commitment to our brand and to our relationship is quite evident. We're viewed as a valued partner and we've worked together to develop some truly innovative products for high spending customers within their base. As you know, China is a complicated market, but I believe our G and S model allows us to appropriately capitalize on the opportunity here. We're building our brand in this important economy and we're doing so in an advantageous way. We don't have to make significant investments in branches and infrastructure.
We don't have to commit substantial capital. We're not altering our risk profile. The middle class and affluent segments in China are growing rapidly and I believe our partner model puts us in a good position to benefit from this exceptional growth. For almost 15 years, GNS has been a true success story for the company. And I believe this business has the potential to help sustain the company's growth over the moderate to long term.
As I mentioned earlier, our international growth strategy also includes a number of opportunities outside of our traditional channels. The acquisition of loyalty partner in 2011 brought 34,000,000 customers into our franchise, all of whom were in countries outside of the U. S. And since that time, as I've said earlier, we've leveraged loyalty partners assets together with our own to accelerate the growth of this base to over 60,000,000 collectors. And as you can see from the timeline, we've been steadily expanding this business by adding 1 or 2 countries or co brand products each year.
And as I mentioned earlier, the most recent being Italy, which we announced last week. Our objective is to continue this pace over the moderate term and we've already identified a number of countries for expansion. The rewards coalition model allows us to tap into large customer segments outside of our traditional core. And I believe it will be a key element in building our global scale over the moderate to long term. Another key element of our international growth strategy is the expansion of the alternative payments on our served platform.
Now Dan Schulman took you through these opportunities in August and they remain at the top of our investment list. Reloadable prepaid has great growth potential both inside and outside the U. S. And we're using multiple options to pursue this opportunity. Whether it's through telecom partners such as Lian Liyan in China our partnerships with major retailers in key growth markets and we hope to announce a few deals later this year, we believe the opportunity for reloadable prepaid has significant scale.
We're investing substantially in these initiatives and our growth objectives here are high. The final investment category I'll mention is the progress we're making on the digital front. We continue to partner with major digital players such as ShopRunner, TripAdvisor, Twitter and Amazon to expand our capabilities and to increase our value to card members and merchants. And these efforts benefit us in several ways. 1, they generate additional billings by deepening our relationships with card members and merchants and by attracting younger prospects to our base.
Investments in this area focus on innovative capabilities for card members and merchants, new ways for card members to utilize their reward points and more protection for card members when paying online. We're recognized as a leading player in this space and we intend to remain so. Our growth opportunities remain substantial. And as I've told you before, our list of attractive investment options continues to outnumber our pool of available funding each year, a good position to be in. We have reprioritized our funding over the last several years to focus on our largest opportunities, growth in our core card segments, expanding our international growth, rewards coalition launches and expanding the scale of reloadable prepaid.
We've already seen good performance from these investments and I'm confident in their long term potential. The objective across all of our growth initiatives is to have the American Express brand be more welcoming and inclusive, to be meaningful to more people as we meet their needs from prepaid to premium. We'll get there not by stretching our brand to fit disparate business opportunities, but by building new innovative value propositions that conform appropriately to the attributes of our brand, service, trust, security and quality. I believe that doing so will not only provide value to our customers, but to our shareholders as well. Our inclusive brand resonates with a number of important segments, one of which is small business.
These companies have unique needs and they expect business partners to provide them with the same level of value and service they provide to their own customers. Now we've served small business owners for many years as card members, as merchants and oftentimes as both. And our commitment to them is extensive. Early on, we recognize the opportunity in serving small business on both the issuing and acquiring sides of our business. Since our first launch of the company card in the 1980s, we've built products and services to meet their needs, first in the U.
S. And now more extensively across a number of key international markets. Small businesses contribute significantly to our billings, revenue and earnings base today. Across the company, we currently have over 10,000,000 card member and merchant relationships with small businesses and over 2,000 employees meeting their needs. We've built a successful business and the opportunity here remains substantial.
Within the U. S. Excluding payroll costs, it's estimated that small businesses spent over $4,400,000,000,000 last year. Of that amount, only 9% was put on business plastic either charge, credit or debit. And if you looked at similar charts for some major markets outside of the U.
S, the potential for shifts to plastic would be even larger. All of this presents us with a major opportunity to acquire and serve more small business card members and to acquire and serve more small merchants. And as you've heard me say before, our model truly is a virtuous cycle. We develop superior value propositions to gain and retain more high spending card members. Those high spending card members go into our merchant locations, driving value for our existing merchants and bring us new merchants, which then provide our card members with even more locations to spend.
We have sizable opportunity on both sides of the small business equation. On the issuing side, which Susan will cover and on the merchant side, which Anre will discuss. We currently meet more than 90% of our card members spending needs in the U. S, which is good, but we're far from satisfied. We want to meet an even greater share of their needs and we want to clearly meet their needs to spend in smaller local establishments.
And that has really shaped our merchant acquisition strategy over the last several years, including a number of exciting new ideas we'll share today. We've had great success in serving small businesses, but we have a lot of runway ahead of us. So with that, let me now turn the podium over Susan Sabat. Susan?
Thanks, Ken. I'm so pleased to be here this afternoon to share with you the part of our business called American Express Open that serves small businesses. Open represents a substantial portion of American Express's billings And we are the leading payment card issuer for small businesses in the U. S. Based on purchase volume.
Today, I will share a perspective on the small business marketplace, our growth strategy, our financial performance and finally our future opportunity. In aggregate, small businesses add up to big business. In fact, 99.7% of all firms in the U. S. Are classified as small businesses, which equates to more than 26,000,000 small businesses.
These businesses generate nearly 50% of non farm GDP and they employ half of all private sector workers. And as Ken mentioned, they spend more than $4,000,000,000,000 annually. So they're big spenders. But less than 10% of that spend is currently on business plastics. So we have a big opportunity for growth.
We believe small businesses will play a critical role in the future growth of American Express. You might ask why. First, new businesses are formed every day, which means a constant source of prospective new customers. 2nd, substantial business spending is on check and ACH and is ripe for conversion to business plastics. And finally, as small businesses grow and expand, we are well positioned to grow with them.
Their success is our success. This is why our mission at American Express Open is to help businesses do more business. Okay. So let me introduce you to some of the business owners we serve. Our small business customers typically have under $10,000,000 in revenue and up to 100 employees.
They're sole proprietors, partnerships and small corporations. And they operate across a diverse range of industries from doctors and lawyers to minors and industrial manufacturers. And they are focused on growth. Take Ted Batikin and Angie Mueng of Pokedo. This husband and wife team sell highly designed housewares and accessories at affordable prices.
These storefront owners are ramping up their inventory as they open up a second location in Los Angeles. Ted and Angie just hired 5 new employees. Or take Jessica Banks, Founder of Rock Paper Robot. Rock Paper Robot in Brooklyn, New York is an engineering and design company that sells furniture and lighting to individuals and B2B clients. Jessica is expanding her collection from solely custom made products to more high volume mass produced items.
She's starting to manufacture both domestically and overseas to meet and create new demand. So you can see growth for small businesses comes in many forms. For some, it's about solving today's business problem. For others, it's about financing expansion plans. And these businesses have distinct payment needs.
Owners are buying inventory to fulfill new contracts, funding the overhead associated with opening new location or buying equipment to improve efficiencies. They often want to monitor and control the spending of their employees as they send their sales teams on the road. And they account for every business transaction, every business expense and often attributed back to specific clients or projects. And for them, time is money. They demand great service and they're fiercely loyal to those who help them grow.
We have consistently dedicated our attention to the unique needs of small businesses for almost 30 years. There are 2 key elements of our approach. 1st, we attract our small business prospects by giving them the opportunity to experience and consider the American Express brand. And once they become card members, we engage them to capture a greater share of their business spending on our cards. Now, if you have a small business owner in your life, you know it's a tough road and they tend to go it alone.
They are one small voice in a sea of big box competitors. So we created a number of programs to help them compete on more equal footing. Business owners have told us that their number one need is to get more customers. So we created Small Business Saturday. You've heard of Small Business Saturday, right?
Small Business Saturday is a day to encourage consumers to shop at small businesses And consumers responded spending $5,700,000,000 with independent merchants on that day alone. So now consumers are thinking about small local businesses when they shop and small businesses are thinking about American Express. In fact, since its inception, Small Business Saturday has helped double American Express's favorability among small businesses. And the concept of Small Business Saturday has become a global phenomenon, spreading to several countries including Australia, Israel and South Africa. Also small business owners have told us they want to know how to run their businesses better and they want to connect with their peers.
So we created openforum.com and our Open Forum mobile app. Business owners get articles and ideas while connecting with each other via the Open Forum community. At the same time, they experience the American Express Open brand. Programs like these support the core issues business owner states and they make American Express relevant. And relevance to business owners leads to more American Express card members.
In fact, we found that business prospects who believe American Express is relevant to them are 2 to 3 times more likely to apply for an American Express card. Bottom line, we believe the American Express card is the best choice for small businesses. Open card members spend 1,000,000,000 every week on our charge cards. The reason, we offer business size spend capacity. And card members enrolled in membership rewards have the ability to earn points across their business spend.
And our Plum customers benefit from early pay discounts, both of which are often used to offset business expenses. Last year alone, business card members received well over $1,000,000,000 in value through point redemptions and early pay discounts. We also offer a range of lending products such as our Simply Cash Card to accommodate business owners' revolving credit needs. We make more than $30,000,000,000 in credit available to our Open Card members through our lending products alone. We also aggregate the collective buying power of our Open Card members to negotiate exclusive discounts with business relevant merchants through our open savings program.
Since we began the program, our business card members have received more than $600,000,000 back to their bottom lines. Of course, all of this is backed by our best in class American Express service. As you know, the American Express network is the industry leading and the recommend to a friend scores among open small business customers are the best in our network. And applying for our product has never been easier. We are where small businesses are, which in most cases is online.
Nearly 40% of our 1st year spending by new small business card members come through our digital channels and that is growing over 20% per year. After attracting small businesses to our franchise, we engage them to capture a greater share of their business spending on American Express cards. Our commercial capabilities allow card members to spend capacity they need to operate and grow their businesses. This spend capacity is best delivered through our charge cards, which represent about 80% of our portfolio. As you know, charge cards have no preset spending limit.
This is how it works. Each transaction is authorized based on its likely economics, which reflect a card member's most recent credit information and spend patterns. In other words, our closed loop gives us an advantage in real time underwriting. This gives small businesses purchasing power without the restrictions of a predetermined spend limit. It allows open card members to put high ticket business to business spend on the American Express card.
In fact, we've seen a 20% compound annual growth rate from transactions over $10,000 over the last 3 years. And of course, our business card members benefit rewards from rewards on those large transactions that further encourages them to put every business purchase on their American Express card. Small business owners are among the heaviest users of mobile devices. In fact, more than 80% of them say they rely on their phones to run their business. Their office is often in a car, on a job site or behind a counter.
So we introduced our new mobile app. This allows card members to streamline their expense management. So gone are the hours that business owners and bookkeepers spend sorting through shoe boxes full of receipts. Now they can automatically capture, catalog and file receipts within seconds at their fingertips wherever they may be. This saves them time and money and allows them to better track their expenses just by using our card.
Just another reason to consolidate their business purchases on the American Express Open Card. So why do we believe we're the best choice for small businesses? Several reasons. 1, we have programs tailored to help small businesses grow. 2, our products have business sized purchase capacity.
3, we offer compelling rewards and savings to improve their bottom line. And 4, we have nearly 30 years of experience providing small businesses with the best service. At American Express Open, we work hard to help businesses do more business. Now let's turn our attention to our financial performance. Our strategies have translated into impressive top line financial results.
Despite a sluggish economy, American Express Open's build business in the U. S. Grew 12% from 2010 to 2013, which compares to American Express at 10% during the period. Furthermore, we have delivered double digit billings growth in 14 out of the last 16 quarters. Over the same period, this bill business growth has resulted in strong revenue growth exceeding American Express' on average and over time target of 8%.
1st year billings from new small business accounts we have acquired has grown by 18% over the same period. We've seen average spend across the American Express Open base grow 11% over the period. Here's what I hope you remember. American Express Open Card members spend over 3 times that of Visa and Mastercard small business cardholders on average. At the same time as our card members have been increasing their spend, we have been able to maintain the lowest write off rates in recent history.
Our intent is to strike the right balance between accommodating our card members spending needs as their businesses grow, while prudently managing credit risks. So let me summarize our financial performance. As a segment leader serving small businesses, Open is one of the best examples of the American Express spend centric model at work. Open is outpacing the enterprise on build business growth and revenue growth and our ROE is well above the company average. But perhaps the most important indicator of our success is the actual feedback from our card members.
We periodically ask our card members if they would recommend American Express to another business owner. This is what we call our Net Promoter Score. Net Promoter Scores among American Express Open Card members are significantly higher than those of our competitors. We're proud that our net promoter score is well over 5 times the average of our top 4 small business card issuing competitors. And small businesses are voting with their wallet.
Since 2010, we have outpaced competitors' growth rates. According to the most recent Nielsen data, American Express spend among small businesses is growing at over 1.5 times the rate of our competitors in the small business space. If you ask why are we so excited about a seemingly mature business with nearly 30 years history, it's because open is a growth business. It's a major source of revenue growth at high returns with a long runway to realize our full potential. Yes, small business is big business.
Currently only 9% of the $4,400,000,000,000 that small businesses spend is on business plastics. Conversely, 91% of small business spend is on wire ACH cash and checks. That is a substantial opportunity. There are a lot more business expenses that can be put on our card. Think about it, raw materials, advertising, shipping, computer hardware and software, just to name a few.
Our ability to offer spending capacity positions us well to convert more business purchases to the American Express card. And we're replicating our strategy globally. There are over 15,000,000 small businesses in our top 7 proprietary markets alone. And our partner banks and markets such as Brazil and Turkey allow us to tap into developing small business populations. And as you know, small businesses are a growth engine of these emerging economies.
This is a promising area for a focus for us that offers a great opportunity for expansion and we're already seeing results globally. Our build business from international small businesses has grown 9% on an FX adjusted basis from 2010 to 2013. In closing, here are the takeaways. Small businesses are a large and vital part of the global economy. Our growth strategy positions us to win their business.
Our financial performance demonstrates a strong track record of impressive results and the future opportunity is ours for the taking. We believe we are the best choice to help small businesses compete and grow around the world. And we have the best in class service that earns their loyalty. For these reasons, Open remains an engine of growth for American Express. Thank you.
Now I'm pleased to introduce my colleague, Anre Williams, President of Global Merchant Services. Anre will focus on our efforts to increase card acceptance among small merchants through our global merchant network.
Thank you, Susan, and good afternoon, everyone. Really, it's a pleasure to be here today. As you've heard, we have a strong focus on small merchants around the world. And while Susan focused on opportunities to improve relationships with small businesses on the issuing side, what I'm going to share are some of the things we're doing to grow our network and make a difference among small merchants. But first, let me give you some context about the role of our merchant business, which we call Global Merchant Services.
Global Merchant Services facilitates commerce on the American Express network by working closely with our issuers. These are our partners who issue American Express cards and have direct relationships with card numbers. Issuers include our proprietary businesses like consumer card and corporate payments as well as bank partners like Bank of America, Wells Fargo and Samsung Card in Korea. On the other side, we work closely with our merchants across all segments, because we understand the needs of both issuers and merchants, we can effectively connect them in ways that deliver benefits to both sides. We work with merchants of all sizes around the world.
We work with large global merchants like Walmart, which has 11,000 locations in 27 countries. We work with national merchants such as Home Depot, which has nearly 2,000 locations across the U. S. And regional merchants like Model's, which has 150 locations solely on the East Coast. And we work with small merchants like Red Flower, a home and beauty retailer that has one store not far from here on Prince Street in SoHo.
Now we have many programs underway to enhance the value we provide to midsize and large merchants, including merchant financing, business insights and digital offers. Today, however, I'm going to focus on small merchants, the segment where we believe we have great opportunity globally. We define a small merchant as American Express accepting merchant that is independently owned and operated and with spending volume on the American Express network below a certain threshold. This spending threshold varies by country. Over the past 2 years, we have acquired on average 1,300,000 small merchants per year globally.
This does not include small merchants acquired through aggregators like Square. Now keep in mind, we also lose some small merchants for various reasons each year. For instance, some go out of business. Now while we have a significant number of small merchants accepting American Express today, the reality is there are still many that don't. And those that do accept generally see fewer American Express transactions than Visa and Mastercard.
In addition, these merchants are small, so it's not efficient for us to dedicate client managers to visit each one of them. As a result, we typically do not have regular direct contact with small merchants. This is the environment in which we're operating. These challenges are ones we've dealt with for years. The difference today is that we're turning these challenges into opportunity.
Because of the environment I just described, small merchants sometimes have certain perceptions about American Express. Let me share a few. Many small merchants believe we are too expensive. They think our discount rate is too high. They think accepting American Express is more cumbersome compared with Visa and Mastercard.
For example, they say, our account statements are separate from Visa and Mastercard and they look different. Our speed of pay, which is the time it takes American Express to pay the merchant after they have submitted charges to us is too slow compared to some other networks. Some of our policies like how we handle charge backs are different from others in the industry. And many small merchants also say they don't need to accept American Express because our card members carry other payment products. Today, we are taking actions to address these perceptions.
We believe these actions will enable us to capitalize on the opportunity we have to bring significantly more small merchants on to the network, to drive greater spending and enhance our relationships with small merchants. Let me take a minute to give you some background on the growth of our merchant network over the years. Back in the 1950s 60s, it was the early days of the American Express card when our brand was known for serving the affluent traveler. At the time, we were focused on signing travel entertainment merchants, primarily airlines, hotels, rental car agencies and restaurants. Some of our earliest merchants include Avis, Lufthansa and the Warwick Hotel on 54th Street.
In the 1970s 80s, when our card portfolio was expanding to include premium products like the gold and platinum cards, we started to focus on large retailers like Macy's and Lord and Taylor. Next came everyday spend in the early 90s. We had a growing portfolio of cards with valuable rewards and benefits and we knew our card members wanted to use our products in places where they shopped every day. We signed gas, grocery and drugstores like Walmart, ShopRite and ExxonMobil. In the mid-1990s when our brand was becoming more inclusive, we opened our sales channels to 3rd party acquirers like Global Payments, Heartland and Vantiv.
And they solicited small merchants for American Express acceptance to grow our network with greater speed and scale. Over the years, we have also worked with partners to sign merchants in certain locations. For example, we have bank partners around the world that acquire merchants to accept American Express cards such as Samsung Card in Korea, Guaranty Bank in Turkey and Banco Bradesco in Brazil. We have also worked with our co brand partners like Delta, Costco and David Jones in Australia to focus on resources our resources on signing merchants and locations important to them and their customers. Now let me now share with you three actions we are taking today to continue the growth of our small merchant network, focusing on small merchants.
We are implementing new acquiring constructs to bring small merchants onto our network at greater scale. We are making policy changes to better align with the industry and we are launching new tools to make working with American Express easier. One of the keys to bringing small merchants onto our network is through 3rd party merchant acquirers, which I mentioned earlier. Let me give you more detail. Today in the United States, we acquire merchants through a number of channels.
We have a direct or proprietary sales force made up of our own employees. They focus primarily on gaining American Express acceptance at mid to large size merchants. For comparison purposes, X is the number of merchants that were acquired on average through this channel over the past 2 years. And new charge volume from this channel is indexed at 100. We have an inbound channel in which merchants who want to accept American Express can contact us directly for pricing and setup.
This channel brings in more merchants, but about half the volume of our proprietary channel. Since 1995, American Express has worked with 3rd party acquirers and we have 3 types. External sales agents who solicit small merchants for American Express and then this channel has brought in 21 times the number of merchants compared with our proprietary channel yet an equal amount of charge volume. In December of 2007, we established the One Point program in which 3rd party acquirers took on a greater role with merchants. This program brings on a significant number of merchants and delivers a healthy amount of new charge volume.
And then there are aggregators like Square, Intuit GoPayment and Pay Anywhere. Aggregators have been around just a few short years they've already proven to be beneficial to us. They sign a significant number of very small or micro merchants whom we otherwise would not reach. And in total, they generate 3 quarters as much new charge volume as our proprietary channel. These channels also help improve perceptions of coverage for American Express in different ways.
In the proprietary channel, we signed big merchants with thousands of locations and names that are widely recognized. A good example of this is State Farm, the number one auto insurer in the United States. We signed State Farm to our proprietary channel last year. They now accept American Express through all of their sales agents nationwide and online. In contrast, small merchants have only a few locations at most.
When we consign a significant number of them through our 3rd party acquirers, we also enhance perceptions of coverage as American Express signage is seen on many more storefronts. These channels differ by the roles that American Express and the 3rd party acquirer play. In proprietary and inbound channels, American Express does everything. We acquire the merchant, own the contract, determine the discount rate and provide all servicing. In the ISA channel, the external sales agent acquires the merchant on our behalf.
However, we still own the contract, set the discount rate and handle servicing. In the one point program, the 3rd party acquirer takes on more responsibility for us. In addition to acquiring the merchant, they also provide all servicing. While American Express, once again retains the contract and establishes the merchant pricing. Today, we are taking the next step in the evolution of our merchant acquiring programs in the U.
S. With the new construct that we call Ops Blue. In the Ops Blue program, 3rd party acquirers will contract directly with U. S. Small merchants for American Express card acceptance.
They will sign the merchant, own the contract, determining the pricing with the merchant and provide servicing. OptBlue will be limited to U. S. Small merchants that have a projected American Express charge volume of less than $1,000,000 per year. And importantly, Opblue Partners will provide relevant merchant data back to American Express, so we can maintain our closed loop of transaction data.
Now remember some of those small merchant perceptions I spoke about earlier, many small merchants believe we are too expensive and many think we are more cumbersome to work with because we are different than Visa and Mastercard. Those concerns are effectively eliminated with optBlue. U. S. Small merchants who sign up through optBlue benefit from a all in one solution.
They now have the convenience of working with a single source, the 3rd party acquirer, who has the flexibility to give them one pricing construct, a single statement, one settlement process and one contact for servicing for all of the major card brands the merchant chooses to accept. Accepting American Express becomes a lot simpler for the small merchant. We currently have 6 third party acquirers committed to Opelu, 4 of which are among the top 10 acquirers in the U. S. Vantiv, Global Payments, Heartland, Worldpay, TransFirst and JetPay.
And we are in discussions with several others as well. I would like to spend a minute explaining a bit more how Opelu works, especially the pricing because it is a major development in how we will acquire small merchants. A key element of this program is that OpBlue acquirers will set the merchant pricing. We will charge the acquirer a buy rate for American Express transactions. The acquirer can then add fees to that and set the pricing to the merchant.
Most likely, the acquirer will have one pricing construct for all networks, simplifying the process for small merchants. The primary benefit of this program for American Express is that we expect to increase our small merchant acquisition by 50% or more for each of the next several years starting in 2015. As we bring more small merchants and more card member spending onto the network, we expect to see some incremental decrease in our average discount rate over time. We expect this impact to be small and to be more than offset by benefits from the additional spending. We will also have an additional offset that comes from eliminating various incentive payments that we now make to the merchant acquirers that we will not make under OxBlue.
Although on a smaller scale, this dynamic is consistent with our experience over the years as we extended merchant coverage beyond T and E into the retail and everyday spending categories. Broader coverage allowed us to deliver more value to card members, capture more business and open up avenues of growth that more than compensated for the lower discount rates. We're excited about OpBlue and what it can do for our network among U. S. Small merchants.
Now let me turn to a few countries outside the U. S. Where we have implemented other types of merchant acquiring construct. Again, each construct is unique to the local market. In Japan, we've had an arrangement with JCB since the year 2000.
JCB is the largest merchant acquirer in that country. All American Express cars are accepted at JCB merchants throughout Japan. And this has proven to be a powerful partnership. With JCB, our spend coverage in Japan is virtually at parity with Visa and Mastercard. Our global network services business that has bank partners around the world plays an important role in increasing merchant coverage in certain countries.
Brazil is just one example, where we are leveraging our bank partnership to grow our merchant network. In 2006, we partnered with Banco Bradesco to issue cards on the American Express network and to acquire merchants. In 2010, Bradesco partnered with Cielo, the largest acquiring company in Brazil to accelerate coverage growth. Our spend coverage in Brazil is now close to parity with Visa and Mastercard as a result of this partnership. American Express has been acquiring merchants directly in the UK for more than 30 years.
We acquire our largest merchants through this channel. For example, last year, we signed the European airline Ryanair through our direct channel. Ryanair carries more international passengers than any other airline. In the late 1990s, we began to engage third party acquirers help grow our coverage faster. Today, we have agreements with 7 acquirers, including Worldpay, Global Payments, Barclaycard and Lloyd's CardNet.
We are leveraging partnerships and making progress in growing coverage in the UK and we still have more opportunity to enhance these relationships and implement innovative programs that we believe will make an even greater impact. While the acquiring constructs in each market differ, they each have made a very positive impact on gaining greater acceptance and coverage among small merchants and improving perceptions of our coverage. Let me move to the second action we're taking to grow our network among small merchants. Several months ago, we began making some policy changes globally to be more consistent with the industry and to be more merchant friendly. For example, last summer, we began eliminating paper statement fees globally for small merchants that had American Express charge volume below a certain level.
Statement fees are common in the acquiring industry. However, we are taking this action because we know they are issued for the smallest of our merchants. And one of the reasons the smallest of our merchants cancel American Express Acceptance. Once we fully implement this change, which we expect to do by the end of this year, we will have eliminated statement fees for more than 700,000 small merchants globally. In the U.
S, we changed our chargeback policy for merchants last October to be more consistent with the industry. The new policy reduces the back office burden to merchants by streamlining the process and speeding up resolution. Over the next year, we also plan to make our speed of pay faster for our smallest merchants in most countries to reflect local industry practices. Again, speed of pay is a time it takes American Express to pay the merchant after they've submitted charges to us. We expect these policy changes to reduce pain points for our smallest merchants, while also reducing attrition and driving more welcome acceptance among this segment.
A third action we're taking is to launch new tools to help small merchants work with us more easily. One example is our merchant website. We have redesigned and enhanced our merchant website in the U. S. To make it easier for small merchants to update their accounts online, manage charge backs and order American Express signage for storefronts.
We'll be making similar changes to our merchant websites in other key markets around the world. In summary, I hope that you can see that we have a strong focus on small merchants globally. This segment is important and presents us with great opportunity to significantly expand coverage and growth spending on the network. We are taking important actions that will make a positive difference, including implementing new acquiring constructs to grow our network at a greater scale, making policy changes to better align with the industry, launching new tools to make working with American Express easier. We believe these actions will enable us to significantly expand our merchant network, allow our card members to use their American Express cards in many more places and enhance our relationships with small merchants around the world.
What you've heard today about the small merchant coverage strategy is an important part of American Express' plans for future growth, and we are very excited about the road ahead. Thank you.
Okay. That's good. Interesting. Who's the guy with the bid? I think we got too many chairs here, right?
We need Susan and Anray. Susan and Anray. All right. Once you guys said we'll spread you around,
Susan. There you go.
Okay.
Thank you.
Right over here. Okay.
It's coming.
Thank you. I had a follow-up question for Anre. Can you
talk about the
thought process surrounding whether there is any potential impact on existing small business customers to the changes that are taking place. Clearly, it's something that it would seem would be helpful to your prepaid strategy in driving acceptance growth in number of acceptance locations. But I wonder if there's any concern over pushback from some of your existing small merchant partners? Sure. Let me clarify a few things about the OptiBlue program.
It will be limited to merchants that do under $1,000,000 in spending on the American Express network. So it's intended exclusively for small merchants. We believe it has the opportunity to significantly expand the merchant coverage in the small merchant segment around the U. S. And we don't anticipate that it will cause any friction with the existing merchants that we have that are small merchants today.
Thanks. A couple of different questions on a couple of different topics. Anre, just continuing along this theme, can you give us a sense, it seems that in litigation with some of the other networks, one of the key points has been the fact that the network was not directly setting pricing to the merchants. And now that seems to be a component of the OpBlue strategy. Can you just help us understand what the potential litigation exposure is there or said differently, maybe why you feel that there isn't litigation exposure there on that topic?
And then I have an unrelated question.
Okay. But what I will say broadly is that the business of American Express does not change in any major way. We still have many global, national and regional merchants that we work with directly. And ops blue is a program that will apply for a segment of our small merchants in the U. S.
Only, but we're very different from Visa and Mastercard. We acquire the merchants directly into the vast majority of cases And we also issue cards on the network and we run a network, which is very different from Visa and Mastercard, which was one of the main discussion points in the litigation.
And said another one of the issues that are at stake usually with American Express, you're getting about Visa and Mastercard are the clauses we have that say merchants should not discriminate against American Express card members at the point of sale steering or otherwise. And this what would Anre announce will have no impact on that litigation. So no, we don't think there's any litigation exposure to American Express here. We think this is about making it simpler for small merchants to do business with us. And then just my unrelated question is, there's been a spate of recent economic data that have caused many economists to revise their more optimistic expectations that you saw as recently as December.
So I'm wondering if there's anything with respect to what you're seeing in terms of payment data, etcetera, that causes you to think that trajectory of economic growth is in any way different than you thought maybe a month or 3 months ago?
The reality is we're just in the beginning of the year. I think it's premature to make any judgments based on billings at this point in time. I mean, in the middle and then we'll go back here and anyone on this side.
Sort of first, Sue and then Anre, could you talk about the perception of open customers to accepting American Express? Is it very different than what you described some of these objections that merchants have? And then sort of related to that, could you talk about how your 2 groups work together to try and sign open card members who accept card payments to take American Express without having to go to merchant acquirers?
Sure. Well, we have merchants that are cardholders and we have cardholders who are merchants. And then of course there are groups where we have opportunity for cross sell. And Anre's team and the Open team work together to try and bring 1 American Express to bear to those customers. And so we do try and bring our programs like Small Business Saturday, for example, which is one great example that uplifts the entire population for both purposes.
We won't release what that overlap is, but as you might imagine, there's enough people in each of those populations.
Hard members' perceptions of the company as a payment source to the kind of general population and people who haven't signed?
I would say in general, what you always see is where you have an additional relationship, you're going to have a more positive view about the company and the brand. And that's really what we see with small business customers. So we won't release the overlap. What we clearly will see and I think it shows is if you have multiple relationships and we have a card member that also is a merchant, We've got a much stronger relationship overall and on both sides of the street.
And it's a great I mean, the businesses work well together. There is crest selling that's going on. It's worked fine up until now and we think it's an opportunity for both businesses to do more of that going forward. And as Ken said, you might imagine the net promoter scores of combined customers generally are higher than of individuals. So they're more apt to do business with us.
Yes, over here.
A question for Susan. When you set out the write off rates that look nice and low, but one thing to keep in mind for us, I guess, is that we're probably seeing a lot of growth in the value of receivables and charges there. I would if I had to get make a guess, I'd say maybe 11% like the spending rate, but I'm sure you won't give me a number on that. But can you just talk about how you think about credit quality and maintaining that and what looks like a fast growing business and probably entering new markets and things like commodities and for mining companies, not something that American Express in its closed loop has traditionally been lending on?
Yes. So loaning money to small businesses is certainly a volatile endeavor more than it is for consumers. However, we do have extensive experience and have experience over time in our corporate payments business as well as in the open business, really looking at how to underwrite these companies. And it's a dynamic process. We learned a lot through the recession.
It was probably one of the best lessons we've ever had in perfecting our credit policies and underwriting capabilities. We've introduced a lot in terms of understanding commercial data better. And we're confident in our ability to maintain our credit profile over time even as we expand.
And building out the bulk of the Open's business as Susan has said before is on the charge card. And as we penetrate these new Susan called out both the charge cards with membership rewards as Susan called out both the charge cards with membership rewards as well as Plum, which is a charge card with an early pay discount. So it's predominantly a charge play to go into these new areas of spending. Lending is important part of open, but it's predominantly a charge because that's where we can give more spend capacity.
Yes. I don't say 2 things. 1 is obviously we've built what we think are some very strong and unique capabilities spend centric model, but no different from consumer. The balance you have is what is the risk profile you're going to have. And we believe we can grow in lending and we can get our fair share in a responsible way, but we're not going to take undue risk we do very well with the spend centric model.
So the balance is that we are going to focus in a targeted way on what are lending opportunities in consumer or small business. But we also have a terrific, gigantic model that is a spend centric model that we have continued to grow. So I think you've got to look at the way we are balancing it. And I think we've demonstrated that we can in fact grow our AR. And as I said, in the industry overall, people are not growing their AR and we're growing billings and our write off rates are the lowest.
So as I want to be clear, our objective is not to have the lowest write off rates, it's to have the best economics. And so we're going to have a balance.
Yes. All right. And then we'll go to you.
Thanks. 2 separate questions. First, it seems to be challenging with cobrand relationships right now, especially in the airline space. American Airlines has left. You manage the Continental departure a few years ago well by introducing new value.
But American Airlines clearly is a big loss. It's one that's been associated with you guys for a long time. How are you going to fill that void? Is this going to be more difficult than Continental?
I would say two things and I'll let Ed and we've also got Josh here who runs our U. S. Business. I think one of the things to focus on is Continental was in our membership rewards program. So it was different.
American Airlines was not in MR. Obviously, the lounges, people see that as value. And I think we are doing things to introduce services and we're continuing to innovate. So we're not standing still. And as I said, from a retention standpoint, we're holding up quite well.
Let me have Ed talk a little bit about what we're doing in that space. And also, Josh, it'd be good for you to chip in.
So it's true. I mean, you know the facts as Ken said, Continental was a tough loss, but we had both membership rewards and airport club access. They merged with United. They didn't renew the membership reward or airport club access. Admirals Club we had as a benefit for Platinum card members and Centurion card members probably for almost 10 years now.
And they merged change of control. They couldn't renew American Airlines could not renew their Admirals Club access for us until their current contracts expire. So what we've been doing all along as we did when Continental exited the program, we put a lot more value back into it with a $200 fee credit, access through customs, a number of other benefits that really has made platinum card in particular a star performer for us in the last few years. We are disappointed by not having Admirals Club. And I think Josh and his team have taken quite a good stand to say, 1, we're going to continue to put more value in.
And 2, we want to be more in control of our destiny. So you see us opening up airport clubs as one example. That won't be the only thing we do, but we want to have more control and be less dependent on airlines. So Josh, why don't you if you want to give an update on airport clubs, if that's okay. And then if there's anything else you would want to build on?
Sure.
I think you guys have hit the main point. The Platinum Card has evolved substantially over the years. It's going to continue to evolve. We're delighted with the value in the card and the loyalty that our card members have shown to us. So in the loss of the American Airlines lounges, fortunately, we weren't sitting still.
So we began a year ago to launch our own proprietary lounge network called the Centurion Lounge. And we have already opened lounges in Las Vegas and in Dallas Fort Worth. And you can imagine we have access to great data about what lounges matter the most to our card members. We've been very thoughtful about that. We've also announced that we'll be opening lounges in LaGuardia and in San Francisco.
And one of the things I'm very excited about is that it gives us the opportunity to bring our brand to life for our card members in a very special way. The feedback we've been getting on these lounges is really quite tremendous. The other thing is it's a proprietary asset that we own that's quite differentiated in the market. You can imagine the timeline to negotiate a lease with an airport to build what is a you could think of it as a 9,000 square foot mansion with all the planning you would expect in a government agency. We've been able to do that and do that pretty successfully.
So we're getting the attention of airport authorities. We're excited about where that could go. But Platinum Card is not just lounges and it has never just been lounges. We in fact own a wonderful consumer travel agency with thousands of travel agents both in the United States and all around the world. And we believe we're best in class in helping our card members to plan their trip with truly consultative service, we do really special things to help them get through the airport very, very quickly.
So for example, Global Entry and TSA PreCheck are things that we credit to our card members for free. So we get them access to that benefit to speed them through. We provide them wonderful lounge access. For example, in the Centurion Lounge or in Delta, we provide great hotel benefits, the fine hotel and resort benefit, if you haven't tried it, is really, really special, both in terms of giving you VIP service and really tremendous rational value. So what we think about with the Platinum Card is at every step in the journey, how do we make sure that we're giving you both a really pampered experience and delivering a ton of rational value to competitive marketplace, but we feel great about our ability to continue to innovate and win in the space.
And so far, our card members continue to reward us with their loyalty. We're grateful for
them. And net promoter scores having generally increased post continental leaving because of all the work we do. It's competitive space. We want to control our destiny and we're absolutely not sitting still.
Thanks. Just a question for Dan. Postcard emulation has come out quickly. Google has obviously jumped on, but that's an open source code. Seems to me this is a great opportunity for you to get away from the botched ISIS launch and move forward by putting the card in your own app and recapturing your own brand and having your app be the wallet and go to market with that?
I mean, is that something you guys are aggressively working toward? It would seem issuers can recapture some brand recognition now. I
say one of the things about the serve platform is that it isn't focused on one particular POS technology. So we're partners with ISIS. They've had a nice launch going in there. We're well branded within the ISIS wallet. But we also look at whether it be QR codes, whether it be beacons, whether it be host card emulation, the platform can support all those.
We do think there's an opportunity with host card emulation. We're already testing it out on the platform. So I think all of these technologies are going to be a mishmash at the point of sale. There's not just going to be one technology. There are going to be several that are out there.
And for right now, CardSwipe is obviously the big one. So, you want to make sure that that CardSwipe ties into your platform. And really the card is an access device to all of the feature functionality that we have on our MX platforms. As that evolves, whether it goes to host card emulation or goes to NFC or goes to beacons or whatever it may be, our platforms are in place to support that evolution.
Okay. Thanks. A couple of questions for Andre. So the announcement of OptBlue is pretty interesting. And two questions there.
One is on just the adoption rate of the merchants that you're expecting as well as speed of pay questions. So on the adoption you indicated, it's pretty healthy growth rate obviously from a small base starting next year. Are you rolling this out as of today, tomorrow? When can the partners start to put new merchants onto the contract?
Okay. So we have 6 acquirers already signed. 2 of them are live today, TransFirst and JetPay. The other 4 that I mentioned will be live in a couple of months. What we project is to increase our small merchant acquisition in the U.
S. By 50% or more each year starting in 20 15. It will build this year. We expect at least a 50% increase in our current acquisition run rate. And we believe that the acquirers will be going out to merchants.
And because of the setup of the program that there will be essentially one source to be able to get credit card to set yourself up for payments, we believe that there will be a fast adoption rate.
Okay. And that's going to be brand new merchants coming on to any network as well as contract roles?
With existing merchants. That's right.
And then the speed of pay question. So are you bringing the smaller merchants to whatever standard you have for merchants who are generating $1,000,000 plus in revenues? Or is this even beyond that level of speed of pay? And I asked the question because clearly, folks like PayPal have generated significant market share in some of these smaller merchants because their speed of pay is extremely fast, right? Like they're giving it to their merchants within 24 hours or within an hour in some cases.
So just trying to understand what level of standard are you bringing that small merchant speed of pay to?
Okay. So for the first part, PayPal is primarily online. And so we're talking about primarily bricks and mortar merchants today. We're talking about small merchants generally under $1,000,000 in the U. S, which is where the vast majority of merchants exist.
And we are also looking at around the world, every industry, I mean, every market in that industry, what is the average given the way acquirers are working in that particular market. And what we hear in terms of feedback is they would like merchants would like for us to be closer to the standards in that market. So we plan to do that and we're going to roll out to many markets around the world and the U. S. Will definitely be one of them.
Okay.
And so for example, the U. S, your merchants who you're dealing with already $1,000,000 or more in revenues, the speed of pay $2,000,000 and below through the OptBlue network would be similar?
So for small merchants less than $1,000,000 we're looking at moving to next day pay, which is generally the standard in the U. S. By the end of this year.
Okay. Thanks.
Yes. Right here and then we'll go over here.
Hi, thanks.
A couple of months ago about Thanksgiving, you had an announcement with regard to security standards tokenization specifically. Dan, I was wondering if you had any thoughts about backtesting that in light of recent events, would that have helped?
No, I would add actually Steve.
I'll throw
that out. Yes, it's we're still looking at it, but that's primarily going to be online and really mobile. And so just for everybody, so with tokenization, what would happen would be as you went to the website, you put in the card member number, your information, that information would go straight to the merchant acquirer to come back and it would be a token with sort of the last four digits of the card number. So the merchant would never have never really have the data, but it's going to be primarily for online transactions and mobile transactions, but it would be online and mobile. And so that in this situation that really wouldn't have helped.
And what you had in the target situation, which you had all the data at rest, which was unencrypted, right? So you had card member name and number and a mag stripe information. So tokenization will help in an online and mobile situation, but it wouldn't have prevented the majority of the breach that occurred at Target. Okay.
And I had one unrelated question for Susan. In referencing these slides about your U. S. Share growth, Is this a funk in a way, so 1.7 times the industry average. Is that market share shift coming from the second slide, which is the adoption from non plastic spend?
Or is that more to address competitor share shift?
It's coming from both. So we are growing in terms of as the market grows as we get further plastic penetration into that non plasticized spend. In addition, there's always a shifting movement from one competitor to another.
But Susan and Open under Susan's leadership has done a fantastic job of getting more spending from existing customers by finding new ways to use the card and having the right value proposition rewards, etcetera, to incent our small business customers to use their card more. It's been a very successful story and in many ways because of the plastic penetration is so low, we've just begun.
Yes.
Great. Thank you. I guess I had a question for Anre. You mentioned that under OptBlue, you'd keep your closed loop capabilities. Yes.
I guess I was just wondering if there's any compromising of data that you could get under OptBlue? And to the extent that it's a broader question I have is just how much information are you actually getting from merchants today? And how much do you anticipate getting over a longer period of time? And the second question I guess I had was if you could dimensionalize how different the buy rate is relative to your current discount rate? Okay.
That'd be great. Thanks. So two questions there. And I'm glad you're excited about the OptiBlue program. So the first one is that it's very important to us to maintain the closed loop of card member transactional level data.
And if we didn't get that, we would not roll out the program in this way. That's a primary thing that each of the participating acquirers are committed to doing is providing us with relevant information of which we have details that we provide to them of what's required. And we have 6 acquirers, 4 of the top 10 in the United States that agree with what we are proposing and have signed on to deliver it and will allow us to maintain the closed loop. So we're excited about this and it wouldn't change the structure of our business model at all, which we think is really exciting.
Yes. I would just as right before Anre answers the second question is just take you back to the controversy on Google wallets. As I've been very, very clear about the data elements are key. We're not going to compromise on that. And that is key.
That's how we're going to operate the business. The closed loop is a big advantage and we intend to keep it. Go on,
The second part was?
How much data you're actually getting today from the merchant?
So that part we can't disclose. But we're getting a sufficient amount.
And then there was a I guess there was a third question, buy rate versus discount rate?
Okay. In terms of the buy rate, it is based on the industry and also the transaction size.
Of the merchant industry of the merchant. The industry is Compare it to the current model. How would you compare it? Well, there isn't We're the acquirer. Okay.
There isn't you can't really compare it directly because depending on Visa or Mastercard or Discover or any other network, they probably are using interchange and different tables and we're not necessarily using that model. But our buy rate will be based on the industry that the merchant is in and the size of transaction. And given that American Express transaction sizes are higher than average, we would expect there to be some small premium in terms of what the buy rate would be for us versus other networks.
With Sanjay, the overall economics look very good.
Yes, I'm excited about OpBlue as well. But I had a question on another note. It was actually going back to Bluebird. Just a question about success there going forward. And trying to think about Bluebird and your relationship, say, with Walmart and the fact that they have competing prepaid card products offered through their stores.
And some of those products have a higher fee construct than what Bluebird has clearly. But in terms of the economics to Walmart, wouldn't those be more compelling for them assuming that they get greater share of the economics from the competing products compared to Bluebird. So how should we think about maybe a conflict of interest or how you think about that your relationship with Walmart compared to what they're getting from someone else. Are we at a point here where maybe there's some additional room for growth, but the fact of the matter is you reached a level where Walmart wants you guys to be and then they don't want additional penetration. Just to help us think about that would be helpful.
Thanks.
Yes, sure.
Well, I think as you could see from the slide Ken had in his deck on our overall acquisition, our acquisition is continuing to accelerate. 4th quarter was by far and away our best quarter that had to do with both the relaunch of Serve, which was very successful and continued acceleration of Bluebird within Walmart. We're really pleased with Bluebird. I mean, I think one of the things we announced after about a year, we had had about $1,000,000,000 put on to Bluebird nicely over $2,000,000,000 already as we go look at Bluebird statistics and that money added into that is rising very nicely as is acquisition. I think the way Walmart thinks about the category is that Bluebird is targeted at the unhappily banked.
And those are people who have bank accounts, but this is an alternative to that. And prepaid, reloadable prepaid like some of the cars that they carried is targeted at the unbanked and underbanked population. Our relaunch of serve goes directly after that segment of the market as well. And so I think Walmart thinks that the 2 products are very complementary that there are different market segments for them. And clearly, it's a huge market right now and there's a crying need for these products.
There were $89,000,000,000 of fees that were paid in interest and fees by the underbanked in 2012. That's about 70,000,000 people and about a quarter of the households in the U. S. If you think about it, those fees and and interest rates were which were just cash checks, pay bills and maybe take out a loan to get you from paycheck to paycheck, comprise about $3,800 per household. That's about 10% of the overall spend of those consumers about as much as they spend on food, right, and it's about a month of their salary.
So there's a huge need to put out compelling value propositions in the market that help those who are underserved. And we feel that the construct of a fee laden reloadable prepaid actually is not what the consumer wants. They want to live their financial lives on our platforms and our products. And we think we have a tremendous value proposition that as you can see from our acquisition numbers and their acceleration are really appealing to customers.
The only other point I would make is that we would not be interested in a relationship that we couldn't grow. And the reality is we're growing as Dan said with Bluebird and Walmart. We believe there is a long runway for growth. But we are certainly, I want to be very direct here, not in a situation where we believe that this product is running out of gas, quite the contrary.
Just following up on the Bluebird question and the under banked consumers. I'm trying I want to tie that to the revenue target that which was previously discussed as $3,000,000,000 and you just now threw out 2,000,000,000 dollars I think I heard for this past year roughly. No, that was low.
That's the amount of money that's put on to the backlog.
I always wanted to tie the 7,000,000 customers in the 4th quarter now and try to get it to characterize how they're contributing to overall spend, what are their spend patterns, what's their monthly or quarterly spend rate? How can we then tie these Bluebird customers to revenue volume
for the company? Good. Let me do 2 things. Let me give one a little bit of context and then Dan can talk about in the last meeting in August, which is all we can give you, we can take you through the construct. But what's very important is when the target was set in 2010 coming out of the financial crisis, as I said in my remarks, the view was we were in a very tough economy and what we're going to be the drivers of it.
And so we had a range of fee service products. The reality is in 2010, we didn't have loyalty partner. We acquired them in 2011. We didn't have reloadable prepaid. So the reality is the fee services products are performing for us.
They're going to continue to grow. But what we also saw is growth, frankly, much better than we had thought in our existing business. So if you look at the existing card business, that actually performed substantially better. We increased the investment level. Then we as you do, when you adjust against growth opportunities, we said we think we've got 2 sizable growth opportunities that are going to give us substantial scale and have a very, very long runway.
So that's the backdrop. And then Dan, I think it'd be useful just to go through again the revenue model that we have and some of the data that we gave in August.
Yes. So obviously on the revenue model piece of this, we earn revenues from discount rates, ATM fees serve as a $1 fee on it. There are other feature functionality in which we get revenues from. On the expense side, there are no rewards expenses. It's relatively fixed costs.
A lot of this is software that we've invested in this. No credit types of losses or minimal credit types of losses as well. And so the actual model is one that is at scale a quite profitable model as we look forward. What we talked about in August is that we had put on 1,000,000 customers onto Bluebird and we have put on $1,000,000,000 What we've done because we've launched serve right now is we've taken a look at the cumulative number of customers we've put on between both Bluebird and serve and some of our other reloadable products. And you can see that acceleration going on.
You can also see it took us almost a year to get to $1,000,000,000 We're now over $2,000,000,000 of money that's been put on to Bluebird in a much shorter period of time. So you can see acceleration of monies being put on the platform right now that are growing well in excess of the growth in acquisition. So what we're beginning to see is people are beginning to put their direct deposit onto the platform. I think one of the stats you saw here is 39% of all the money put onto the Bluebird platform in 2013 was direct deposit. So you've got a huge amount now of the spend that people are doing.
They're paying their bills on the platform, they're taking cash out via ATMs, they're doing their everyday spend off of their BlueCard and their ServeCard. What Anre is doing and what we're doing is very kind of it works, it's symbiotic, right? Because as we become more and more of an inclusive company and we have targeted value propositions and really almost every segment of the market that stay true to our brand attributes, we're bringing on more and more customers onto their issuing side. And now they have places where they can spend at each and every one of the merchants that they want to go to. So, Andre can bring in merchants, then we need to make sure that when those merchants come in that there's American Express spend at each of those merchants.
And so, it's a very symbiotic set of relationship. We're bringing on quite a number of card members accelerating now in the millions and millions and millions and Onre is accelerating our small merchant acquisition as well.
How much is the standard cost estimate?
So one of the things that we've talked about in the August meeting is that for direct deposit, the amount of money that they put on the platform is roughly equal to our proprietary overall card volumes on the direct deposit. It doesn't mean they spend the same amount. They do some ATM, they take some ATM off, they pay bills through it, but the amount that they're putting on is roughly equal to proprietary cards overall.
Yes.
Thank you. First, I like OpBlue as well.
So thank
you for presenting it today. The question really relates more to what I see is an evolving competitive landscape for merchants more broadly. The closed loop in American Express in particular has really enjoyed a special relationship across the payments ecosystem as issuer network and acquirer. Your larger some of the larger open network competitors have begun to focus on merchants much more closely and trying to engage with them. And I'm wondering how you see that competitive landscape evolving.
Obviously, it has the tendency to want to be somewhat margin dilutive if you let it. And I guess I'm interested in what strategies you are looking at to 1, remain ahead of the pack in terms of your merchant relationships and where you can add value, so you don't see that margin dilution? And then I have a follow-up also. Okay.
So let me start off. This is one that each of us had a lot of passion for. I think one is what I focus on is this convergence of online and offline, which is major. And the reality is that a lot of players, online players are trying to figure out how they can get physical presence. That has not been as easy as they thought.
And it is absolutely important. Tremendous growth in online, we're very focused on that. I think we're making excellent progress there. But the ability in fact, which we focused on several years ago was this convergence of online, offline is really, really valuable. The second point is that when you think about the networks and other participants, having this virtual cycle that I talked about, card members, the in years of customer and the merchant is really powerful.
When you are just on the merchant side and the reality is if we look at Visa, as you know, they don't acquire merchants. So they have a network. They have to in fact engage enough with the end user. And that is not easy. That's not seamless.
With us, we are together. It is an integrated business model, which gives us a major advantage. So what we are doing is using some of the capabilities that we have in the closed loop as it's from an integrated relationship to form a range of partnerships with both offline and online players. And what that means is the targeting, the fact that we can do more personalized marketing is very, very important. And then frankly, I would overlay what's happening with loyalty partner because that really is not just a loyalty effort.
There's a focus there on performance marketing, because the merchant is actually funding the loyalty program and that makes a major difference. So from my standpoint, what we've got to do is really focus on our 1st mover advantage of being the leader in convergence and really drive customized value propositions and integrated value propositions using both the physical and the online capabilities. And a perfect example of that to me is what we're doing with taxis, where you can look at that as a convergence of online, offline capabilities. And that's very much our focus. Ed?
So I think we gave some really good examples today between Ken and Susan's presentation about the power of the closed loop in our unique business model. Look at our fraud loss rates compared to Visa and Mastercard, half or less than half. That's because of our closed loop model, early detection, brilliant data scientists, modeling the closed loop data for early detection and driving incredible performance. And I would say it's that same closed loop data that's powering our credit performance as well. You saw slides both in Ken and Susan about how our average spend is 3 to 4 to 5 times higher than Visa and Mastercard.
We talk about spend capacity. We talk about going into new categories of spending for small businesses. That's because we have the spend centric model that powers no preset spending limits on charge cards. And Susan can work with Onre to target merchants in the B2B category to sign them up and we can drive card members to spend there using our rewards and business products. That's worked incredibly well.
Our goal in the digital transformation, as Ken said in this convergence, is to bring to life our ability to create unique value for card members and merchants on digital platforms. And we've talked in the past about what we've done with Twitter and Facebook and Foursquare and Xbox and TripAdvisor and pay with points in New York City taxicabs are ways we can because we have this closed loop unique business model, we can bring it to life in ways that our competition is still struggling to replicate. And you hear some of the issue we're saying, yes, they want to do deals with acquirers or get exemptions from Visa to try to replicate a closed loop on a small part of their business. It's because they see what we're doing. I'd still say it's almost 3 years ago now.
3 years ago this month, we launched the 1st card linked offer on Foursquare at South by Southwest in Austin And no card issuer or network has been able to replicate that simple thing we did 3 years ago. New firms in Silicon Valley, Cardlytics and others are trying to do that now through other methods. But I think we have demonstrated that we have a unique advantage. It's been there since we've had a card business and we're bringing it to life in new ways that the competition has not yet been able to figure out.
The only other and Dan, you may want to make a comment, but the only point I would make is the fact that we would have been able to launch serve because we have the physical presence right away. And we can think of some other non traditional players who are trying to get the physical coverage and it hasn't happened very quickly.
Nice segue to my other question. A lot of the moves that you've made into emerging payments and other products into segments that are not traditional for American Express have also the risk of brand dilution and you've had such a powerful brand in the market. How do you plan to manage that? I know you've spoken to it in the past, but obviously as you proliferate more cards into more of these segments, I think that there's still a sense that there's some dilutive nature to that inclusive strategy and how do you really see to kind of prevent that as much as possible?
Yes. 2 or 3 things I would say and I'd bring you back to John Hayes' presentation in August where what we saw was that an Amex customer who in fact had a Bluebird product or a serve product felt better about the brand and we did not see any dilution of existing customers who did not have any connection to Bluebird or Serve. Here's the key point at the end of the day and I go back to the lesson this company learned in a hard way and it took them frankly 10 years to learn the lesson and the marketplace didn't realize what was going on is taking the green charge card and stretching it to appeal. So when Andre went through those different segments of we were in T and E, then we got into retail, The reality is that was all on the back of the green card. That did dilute the brand.
And the focus that we've had since the 1990s has been let's develop customized value propositions against each segment. And one of the things I remind people in this company, because this is back of why we have to be an inclusive brand, is part of your first question is that the digital transformation has redefined what scale is all about and what needs are. And the reality is when you go back to the traveler's check product that helped build the brand for the card product and that product was offered to any customer segment. So the key thing is to have the right value proposition for the right customer segment. We're not backing off as we talked about premium.
We are innovating on that. We want our more than our fair share of the premium segment. That's important to us. And the reality is that we believe that we can go from reloadable prepaid, serving a wide spectrum of customers to affluent customers. And frankly, if we don't do that, then we're going to have problems in the moderate term.
The long term, we've got to be more relevant. We've got to be more inclusive, but that does not mean that we're going to lose our focus on the premium segment. But we're just coming out with the right products. And so we're not offering a lending product to a certain segment and we're going to take more risk there. What are we doing is we're offering a product that really meets the needs of a segment in a very powerful way and we think that enhances the brand.
I would just say technology has enabled us to do stuff we've never been able to do before, right? Before you couldn't really move into debit like sort of offerings because you needed a bank account. Really now a lot of banks are going to be great at commercial banking, but not great at retail banking right now. You had 2,300 branches that closed last year, right. What do people do who used to go to banks to try and cash a check, to try and get a debit card, to write bills out right now, technology software, the tied to mobile apps, our technology is enabling us to create value propositions that as Ken said, actually enhance the brand.
They're incredibly innovative. They're all about money movement and money management. The feature functionality is so different than just what you might think of as a prepaid card, but they allow you to manage your budgets to save money, to pay your bills. And so I think actually the products we're putting out, which are consumer champion products that are tailored to very specific needs and needs that are great both in our country and in economies across the world are only going to enhance our brand and they're bringing in new demographics. Think about that.
Remember Ken pointed that out. The overwhelming majority of under the age of 34 under the age of 34. So it's new demographics, those demographics are going to be our customers for a long time to come. You have to evolve as a company and if you can stay true to your brand attributes, then that's the right thing to do as a company to be vibrant and a growth company going forward.
And the simple thing with brand attributes is we would dilute the brand if we didn't provide the same level of service to these customers that we would to a charge card customer. And that's not going to be the we will not sacrifice that. So the same world service team that does a phenomenal job with card members are now going to serve customers as an example. We certainly would dilute the brand if we cut service.
Yes. And I would just end it with when I came to this company in 1981, the big debate was moving into retail versus T and E. Fortunately, most of the people who were arguing on T and E have left the company. We would have had a problem if we stayed and their major argument was we would dilute the brand and what they missed was it's all about value propositions in the right customer segments.
Another question specifically on MCX. So MCX isn't necessarily about payments. It's about trying to break the paradigm of issuer funded rewards driving the loyalty of the stores they're earned at. Do you think that consortium made up of lots of large competitors can generate enough value to start to break that?
My view, I'm not going to comment a lot on MCX specifically. What I will simply say is to be successful at the end of the day, you've got to have a customer driven value proposition. And it can't just be I want to lower my costs. It has to be what is going to be unique and of strong value for the end user customer. That's what they're going to have to do.
And if they don't do that, it's not going to be because someone can tap their phone. It's got to be that they're offering really strong value and the marketplace will basically decide.
Yes.
Question on Small Business Saturday. I mean, how do you think about how it's going to evolve? A couple of years ago when you start 3 years ago probably when you started it, you provided a small incentive for customers to walk in and spend money, it was $25 bucks. Then last year, you dropped it by 60% to
$10,000,000 Someone's paying attention.
And maybe the small businesses come up with incentives? I'm just trying to think how you're thinking about it.
Sure. Well, we are so pleased with how Small Business Saturday has taken off and it's really taken off in the hands of merchants. They have embraced it and really seen it as a halo under which they can market and attract new customers. Importantly, they are putting their own skin in the game and you see thousands of offers being put out by merchants themselves in order to attract customers on that day. And we're also seeing communities come together.
We had over 1500 communities in 2013 who did their own programming around Small Business Saturday. So as we think forward on Small Business Saturday, we see great things and it's not all about American Express. In fact, it's really about the merchants who own the program now.
And it did Susan launched this at the end of 2010 and since then I think it's been a big part of helping rejuvenate the small business economy as well as the American Express brand because of the advocacy we have. And one thing that is about the future is you're now seeing us doing this in other countries. So last year we did in the UK, we did in Australia, we did it in Israel, we did it in Toronto and Canada. And this whole shop small movement is becoming an important part of our brands in many other parts of the world as well.
Yes.
Just a question for Anre on the timing of the small business initiative on the merchant side. Is this happening now as opposed to 3 years ago, because the prerequisite was you had to have small business Saturday and sort of some other things going on to drive that or why now? Why not a few years ago?
What I would say is that things are evolving quickly in the marketplace. I think the question was that a lot of people are interested in merchants and we decided now is the right time, not that it was caused by Small Business Saturday or any thinking. We just believe that we've always provided great value to merchants in different segments and small merchants are ones that we think we can do more. Listening to their feedback, there's certain things they want from American Express and the industry is changing. And we want to make sure that we are competitive and customer friendly in every segment with card members and with merchants.
And so as you heard, we have a number of things we're doing, not just change the acquiring constructs, but also changing policy decisions to make ourselves more friendly to merchants, so they will open up acceptance and welcome card members in.
And as Anre showed, it's been an evolution, right, before Oplu was one point, before 1 point was the external sales agent, before that it was predominantly proprietary and want to honor channels. So this has been evolving for 20 years and I think the market is ready for it now and the acquirers are looking for new ways to grow with small merchants and to be more competitive. And we've evolved and key for us as Anre and Ken have said was making sure we preserve the closed loop. So we were able to get the terms we wanted, right? And we were able then to see, okay, if we do a buy rate versus a discount rate, can we still preserve a closed loop?
And the answer is yes, or we wouldn't do it. And so the market was receptive and I think Anre and his team done a fabulous job in the last 12 months to get us where we are now with how many signed contracts? 6. 6 and counting. Conray tells me.
Yes. So that would say the market is ready.
Yes. But I think one more thing I would ask, Ian, is the optimal program came from or the idea some of the ideas of it came from requests that came from acquirers. On every program that Ed mentioned, the acquirers have always wanted to be able to manage the pricing, but we had different reasons why we thought it was important. With this timing and this construct, we will give the acquirers the opportunity to set the price that they charge to end merchants. It will not be American Express.
We will insist on having the closed loop data. So we worked out an arrangement that we think works for the industry, works for everyone involved and can grow acceptance much more broadly, which is what American Express is about.
We also we've had, let's say we have good experience with the aggregators, which have not a dissimilar model when you look at Square and others where we set a rate for them and they price to the merchant and we get closed loop data. So that's been very different to that. That didn't Square didn't exist 3 or 4 years ago. And they've done a very good job for us bringing all those micro merchants that Andre described on the market. And it's been and we were able to get the data and that's been a good negotiating term with the acquirers now through the Oplu program.
So there's been some changes in the marketplace itself that have made this possible.
So we
got time, I guess just for one more question,
if anyone has it, right in the back.
I want to ask about the $1,000,000 threshold a little bit. On one hand, let's say I'm a merchant, I'm doing $900,000 this year. Next year, somehow my business grew to $1,200,000 Do I need to renegotiate my contract? That's question number 1. Number 2, let's assume I'm a merchant doing $1,100,000 this year and I can't get the benefit, I still need to pay higher back office costs, I don't get the next day pay, will that piss off those type of existing customers?
Well, let me explain.
Will they have lower net promoter scores?
Right. So what happens what we found by and large is that the needs differ as merchants grow. So if you are a merchant doing $900,000 a year or over $1,000,000 you probably see a healthy amount of American Express transactions. That will give that will give you financing based on your receivables that will enable your business to grow. We probably will doing digital offers with you, whereas if you're a smaller business that may be doing $75,000 a year in transactions, you might not be engaging in merchant financing and digital offers with us.
So our value proposition changes in scales based on the size of the merchant and we intend to be a great partner for merchants in every segment. It's the smaller segment that has unique needs that we're trying to innovate and become more flexible to meet their needs. And that generally is below $1,000,000 The thing I would add today is that all of the external acquirers that we work with, the 1 point partners and the 3rd party acquirers are capped at $500,000 in spend. So the One Point program moving up to $1,000,000 is a great thing for the acquirers because this is something they have requested for a number of years. And so we believe we're expanding the ability for acquirers to work directly with merchants and we think it's going to work really well.
Yes. The only other point I would make overall is, despite the level, we deal with these issues all the time. And I think we have dealt with them in a very effective way. And I'm confident that we're going to manage Oplu very well.
So thank you very much.
That does conclude our conference for today. Thank you for your participation and for using AT and T Executive Teleconference. You may now disconnect.