Amex Walks Away From Enterprise B2B: How Specialists Win in Business

Feb 23, 2017 8:49:00 AM

Kontrol Payables LLC
When American Express decided to dismantle its enterprise growth division last year (, the news was a surprise to many in the sector. With the benefit of a year's worth of hindsight, though, we can say that what seemed like a puzzling decision at the time was actually quite logical. Why? Amex is a specialist and specialists win in most facets of life, as in business. 

Amex is arguably the leading monoline issuer in credit card history. Former parent to card processing giant First Data, Amex helped reshape the consumer loyalty and T&E card markets. Does Amex have a portfolio weakness? Yes, its B2B enterprise sales.
Sales in the commercial card B2B sector typically rely on three key differentiators: relationship, technology and price.

Differentiator 1: Relationship

Amex, like most monolines, has no treasury base to leverage in its fight for B2B market share. Relationships aren't its strong suit there. Strike one.

Differentiator 2: Technology

In the area of technology and innovation in the B2B sector, Amex has also fallen relatively flat. A notable mis-step was its 2006 successful acquisition but unsuccessful integration of Harbor Payments. Amex also acquired GE's commercial card portfolio which brought along GE's patented vPay solutionCutting edge at the time, vPay never became a core asset in Amex's technology arsenal. Significant internal development efforts exist at Amex, but its enterprise divisions have garnered limited innovation fanfare. Strike two?  

Differentiator 3: Price

The last differentiator left in Amex's arsenal - price - is a core strength of Amex. Unlike most other issuers who have to follow the path spelled out by Visa or MasterCard, Amex writes its own pricing schemes. Adoption in the still-growing B2B sector is primarily being driven by supplier adoption. Unfortunately for Amex, suppliers (merchants) across the industry often view Amex as the more expensive optionCould this be impacting Amex's ability to effectively displace checks? If perception is reality, then...strike three.

Conclusion: Specialists Win

Amex isn't going anywhere. As Amex steadily moves away from enterprise B2B, we can expect this industry specialist to bolster its traditional consumer and T&E business lines. Specialists win.

This post originally appeared on LinkedIn. It has been edited for this format. Follow Kontrol CEO Scott Songer on LinkedIn and Twitter for more thought leadership on B2B payments, fintech and AP innovation.
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