context celebrates 10 Years

Aug_sep

2006
A mAgAzine providing current content And pertinent context for the people of AmericAn express

How Will You Be Paying For That?

new ways to pay are taking hold with consumers. What are they and what do they mean for American express?

Additional Online Content for This Issue of Context

www.express.aexp.com/context/
a DecaDe of context Weve added all the issues from the past 10 years to the context archive, where you can read more about the how and why behind some of american express most significant events.

ONLINE aug_sep.2006

THIs Issue

On THe COver Cover Art_Michael Miller Editor_Janet a. Lee Managing Editor_Cynthia aquila Design_Bernhardt Fudyma Design group Printer_Bannon group Ltd.

IN PRINT

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AXP Shorts
luxurY DefineD What luxury means to affluent consumers in the Asia-pacific region and europe. Preserving HistorY American express builds on its commitment to historic preservation. tHe numbers number of times cardmembers pay their American express card bills online. global exPress Whats happening in Bangkok, Bratislava, Belgrade, dubai, new York and paris.

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How Will You Be Paying For That?
cover storY

10
Putting Innovation to Work
by Kristin Roth the first premier Award-winning teams of the chairmans Award for innovation get results with teamwork, motivation and creativity.

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Happy Birthday, Context !
We celebrate a decade of chronicling the how and why behind American express successes, challenges and plans for the future.

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Look Whos Talking
Whats been your experience with contactless payments, electronic bill payment, and shopping online? tell us what you have to say at the next chapter online discussion forum. (www.amexweb.com/nextchapter)

by Cynthia Aquila new ways to pay are gaining popularity among consumers and providers. What are these new models, who are the players, and how is American express capturing its share of this attractive market?

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Luxury Defined
Affluent consumers Are redefining the concept of luxurY, According to tWo reseArch reports recentlY commissioned BY AmericAn express inside the Affluent spAce in the AsiA-pAcific region And 21st centurY living in europe. the studies found thAt luxurY todAY is ABout unique experiences, emotionAl connections And intAngiBles such As consumers using their knoWledge to oBtAin WhAt is vAluABle to them or fulfilling personAl AspirAtions rAther thAn onlY Acquiring expensive possessions. Both reports of consumer Attitudes, BehAviors And expectAtions Will help AmericAn express And its merchAnt

SHORTS

pArtners Better understAnd And respond to the evolving needs of Affluent consumers, A rApidlY increAsing segment Around the World. inside the Affluent spAce is BAsed on in-depth group discussions And individuAl intervieWs With Affluent consumers And service providers in the AsiA-pAcific region. 21st centurY living is A result of individuAl intervieWs With some of the Worlds most influentiAl trendsetters in trAvel, fAshion, design And food fAshion designer giorgio ArmAni, chef AlAin ducAsse, hotelier iAn schrAger And interior designer mArcel WAnders, Among others.

The numbers | last year, cardmembers paid their American express card bills online 100 million times.

Preserving History
items of interest to the people of AmericAn express

american express renewed its long-standing commitment to historic preservation around the world with the announcement of the Partners in Preservation program in June. through the program, the company will provide $10 million over five years to two partners the World monuments fund (Wmf), a u.s-based organization dedicated to preserving cultural and architectural heritage internationally, and the national trust for Historic Preservation, a u.s. congressionally chartered organization focused on saving historic places and revitalizing americas communities. Wmf and american express announced the first grants under this new program in July. seven sites will receive a total of $700,000: church of la merced, argentina, is part of one of the oldest monasteries in buenos aires, which dates from the 1700s. Quinta da boa vista, brazil, was home to the brazilian imperial family for much of the 19th century and now houses the collections of the national museum. Diocletians Palace, croatia, was once a retreat and retirement home for the roman emperor Diocletian, and is a rare example of a roman palace that has been preserved.

church of san Juan bautista, mexico, is currently a functioning church and museum, built in the 16th century to support the religious conversion of mexicos indigenous population. ostankino estate museum, russia, commissioned at the end of the 18th century, is among the most important surviving estates in russia. segovia aqueduct, spain, the citys most prominent symbol, was constructed in the first century A.D. and is one of the worlds best preserved roman aqueducts. old Dutch Hospital, sri lanka, located in the historic city of galle, is one of the public buildings damaged during the tsunami in 004 that has become a priority for restoration. american express was the founding sponsor of Wmfs World monuments Watch initiative. from 1995 to 005, grants from american express under this program helped preserve 119 historic sites, in 59 countries, placed on the Wmfs list of 100 most endangered sites. american express has also supported major national trust initiatives, including save americas treasures and Heritage tourism programs.

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million
DubAi bAngKoK PARis nEw YoRK

{gLoBaL express}
in July, American express and german automaker BmW introduced the BmW credit card in the united Arab emirates a first in the automobile sector in the middle east. cardmembers can enjoy the benefits of

redeeming points for vehicle servicing, accessories, apparel and even car purchases. similar cobranded cards are available in Australia, germany, new zealand, thailand and the united kingdom.
On THe neTWOrk: THe LATeST GLOBAL neTWOrk ServICeS PArTnerSHIPS And CArd LAunCHeS nEw YoRK

in July, Bank of America launched its first credit card accepted on the American express global network the Bank of America American express rewards card. cardmembers will have access to one of Bank of Americas richest rewards programs and to exclusive merchant offers available only through American express. the clear plastic design that distinguishes the card is patented by American express. GNS added two partners to its growing list of partners in Eastern Europe, a region where consumers disposable income has been increasing and the number of new businesses is on the rise.
bRAtislAvA, slovAKiA

frequent travelers in thailand can earn more for the miles they fly with the thAi American express platinum credit

card, launched earlier this year. cardmembers earn miles ticket purchases.

for everyday purchases and bonus miles for thai Airways

establishment services (es) europe recently achieved a big

win by signing a three-year acceptance agreement in france Wal-mart. Although our card is accepted at other carrefour locations around the world, the retailer in france had been

vuB Bank has become the exclusive issuer of American express cards in slovakia. the cards will be marketed to the banks existing and potential clients through vuB branch offices.
bElgRADE, sERbiA

with carrefour, the worlds second-largest retailer after

one of the companys largest merchant holdouts and accounted for about half of carrefours $90 billion in sales for 2005.

Banca intesa Beograde exclusively issues the American express green and gold credit cards in serbia. the bank also has rights to sign local merchants. some of the benefits of these cards include travel booking, preferential prices for holiday travel, and special merchant offers and discounts through American express selects, an online program that gives cardmembers access to thousands of dining, shopping, travel, and entertainment offers, and experiences from local merchants in 52 countries.

American express Business travel signed more than $1.5 billion in sales from new and renewing clients headquartered in north America in the six months ended June 30, 2006 an increase of $418 million, or 63 percent, over the same period last year. u.s. transactions processed online also grew 43 percent.

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illustrations_Michael Miller

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by_Cynthia Aquila

its monday morning and Joe consumer orders a large nonfat latte at the local coffee bar. Waving his key fob in front of a card reader, he quickly pays and heads off to work. . . . later in the day, Joe meets up with his colleague neela for lunch. Joe doesnt carry cash, so neela pays the bill. from his cell phone, he sends a text message to his bank authorizing the transfer of his share of the tab into neelas account. While hes on the phone, he sees a message from his favorite clothing retailer a discount offer of 15 percent for his next shopping trip. he stores the message and heads back to the office. . . . After wrapping up his workday, Joe logs on to his banks Web site to pay his bills. Joes not done he surfs over to the itunes music store to download a few songs. At checkout, Joe chooses the paypal option to have the purchase price deducted directly from his bank account. . . . Joe shuts down his computer and heads out for the evening. . . .
Most consumers may not rely on alternate ways to pay quite as much as Joe does. But these types of payments are gaining popularity an estimated $1 trillion in volume worldwide and growing rapidly at about 20 percent a year. In the next five years, the total volume of both electronic and debit card transactions is projected to surpass the volume charged to credit cards, according to The Nilson Report, a consumer payments industry newsletter. Technology has made it possible to use plastic for a large volume of payments that historically have been paid with cash or checks, says Paul Carr, vice president, Strategic Planning Group. This is making it easier to move some types of cash spending onto alternative forms of payment an estimated $4 trillion of consumer spending globally. Its a significant opportunity, and we want to capture our share of this potential spending, these customers and merchants. New payment models are emerging in three areas: Micropayments small, everyday purchases usually of less than $10. Electronic bill payment either directly at a billers Web site or through one single, secure site like the customers bank. Online consumer payments new models, such as PayPal, that accept credit cards but often drive users to other forms of payment. American Express competes in these areas and has been experiencing growth, particularly in online payments. At the same time that these models present an attractive opportunity for us, they also pose some threats. Competition is increasing and other issuers will also be using these payment methods to attract more customers. Some merchants are also finding these payment models appealing since the fees are sometimes lower than those for traditional credit cards. And new technologies and players add to the complexity of competing in these areas. As we move forward, we have to be smart about how we continue to invest in these categories, Paul says. Were looking at what makes sense for our brand, what will support our strategies for growth, and what will attract the right customers and merchants. In this article, well take a look at the categories of electronic payments how they operate, whos involved, our position and

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what we need to consider to take advantage of the opportunities and grow our share.
MicroPayMents: a DoLLar Here, a DoLLar tHere

Your transit fare, a Big Gulp from 7-Eleven and music downloads these are some of the transactions that are considered micropayments. Of an estimated $2 trillion U.S. that consumers spent in 2005, micropayments accounted for $350 billion. Contactless micropayments are in the early stages of growth, representing just 4 percent of total micropayment volume. To make a purchase, consumers simply hold a device powered by radio-frequency technology next to a special card reader. The transaction is quickly approved and processed without the need for a signature.

contactless cards across the U.S. in 2005 when we introduced Blue from American Express with the ExpressPay feature. Blue Cash, Blue Sky and Clear cards also come equipped with a contactless chip. Today, cardmembers can use ExpressPay at more than 25,000 merchant locations across the U.S., including McDonalds, Arbys, 7-Eleven, CVS and a number of regional merchants.

Merchants best suited for this technology include quick-serve restaurants, convenience stores and drugstores places where consumers generally use cash and want speedy service. American Express is well positioned with ExpressPay, which the company began piloting in 2002. We were the first to issue

Customers like ExpressPays speed and convenience, says David Bonalle, vice president, Advanced Payments Enterprise Development. Its still new for people, but were seeing a steady increase in usage. Momentum has been building in the industry as other card issuers introduce their own devices. Chase has Blink and

MasterCard has PayPass, and both companies are heavily marketing their products. More competition means more consumers are becoming familiar with the technology. Increased consumer awareness, coupled with broad merchant acceptance, will be the driving forces behind growth in this category. Merchants in other industries are also considering contactless applications. Transit authorities, for example, are interested in developing their own cards. MasterCard, Citigroup and the New York Citys transit system recently started a pilot for a contactless card terminal. Motorola and Nokia are piloting applications using cell phones in the United States, a model that has already been introduced in Europe and Asia (see related sidebar on page 7). Taxis are another possibility, especially now that some major cities worldwide have vehicles equipped to accept credit card payments. American Express is looking at opportunities for integrating ExpressPay into these applications and possibly working with partners to do so. As this category takes off, we want to be ready with the right products, services and merchant acceptance to access these customers and transactions, David says.
eLectronic biLL PayMent: custoMers stick to it

U.S. consumers paid more bills online than with cash or checks in 2005 $2.9 trillion,

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consumers today can do more with cell phones than just make phone calls. they can send text messages, download music and videos, and surf the Web. now add to that list buying a hamburger from a fastfood restaurant, purchasing a new outfit from a favorite retailer, and sending money to family and friends. Declining call volumes in a maturing market has spurred telecom-equipment manufacturers and wireless service providers to look for new sources of revenue. and a new frontier: mobile commerce, using mobile phones as payment devices. mobile payments have been available in Japan since 004. the following year, ntt Docomo, Japans leading telecommunications company, joined with sumitomo mitsui card co., the countrys secondlargest card issuer, to launch iD, a service that lets customers use cell phones like credit cards at point of sale and even online. Phones are embedded with a computer chip and antenna powered by near-field communications, a technology that is like two-way radio frequency. the users bank account and payment card

information is stored on the chip, which is used as a mobile wallet when making purchases. With a wave of the phone near a special reader, the customers account is automatically debited for the purchase. Docomo, in effect, has become a card issuer with the purchase of an interest in sumitomo. other companies like Jcb, Japans largest issuer, and consumer lender uft nicos are offering the iD service in conjunction with their contactless payment products. the u.s. and canada have been slower to enter mobile commerce. Wireless networks in these countries havent been able to handle these functions until recently when systems were upgraded. u.s. companies are now beginning to test mobile wallet features. visa, nokia and cingular Wireless are piloting a program at atlantas Philips arena. Discover, working with vivotech, a company that markets contactless technology, is testing a mobile wallet. PayPal has signed up a small group of retailers for a service that lets customers text-message codes provided by participating merchants to buy cDs, DvDs and

clothing. Just like online PayPal transactions, mobile payments are deducted from a customers account that is linked either to a credit card or bank account, and deposited in the merchants account. motorola, one of the worlds largest sellers of cell phones, has developed m-Wallet, which not only stores account information for multiple cards but also allows users to receive retailer coupons, transfer money and pay bills. m-Wallet can be used on PDas and phones, even those not made by motorola. the company expects to partner with wireless network operators to offer this service before the end of the year. While companies are venturing into mobile payments, it remains to be seen whether u.s. consumers are ready for this technology. concerns about privacy and security may make some users hesitant to store personal and financial information with third parties. to address these concerns, service providers have incorporated such security measures as requiring a Pin to verify payments and encrypting stored information with a password that changes with each transaction.

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GooGlinG PayPal
more than half of total volume for consumer bill payments. Most recurring household payments, such as utilities, cable service and store credit cards, are made directly through the individual vendors site. But more consumers are opting to consolidate their bills and pay them through a single, secure Web site or aggregator which is most often their bank. Other companies, such as AOL and CheckFree, which markets bill payment technology, offer similar services. In 2005, the volume of payments through aggregators totaled $900 billion and has been growing at about 20 percent a year. Banks are aggressively promoting bill payment on their Web sites because its less expensive to process online payments than paper checks. When customers pay their bills online, those payments are processed through an automated clearinghouse, a network for settling payments between banks. Bill payment also acts as a sticky service, meaning it helps build customer loyalty. Banks are using this feature to attract customers and then cross-sell other products. For instance, some banks are promoting their credit or debit cards as an option for bill payment. And they are targeting the same high-spending, loyal customers we want to attract. Recent research suggests that customers who are paying bills online are more affluent,
PayPal is making a bid to become more than an online payment arm for ebay auctions. Purchased by ebay in 00, more than two-thirds of PayPals payment volume at present is generated by auctions. buyers can fund their accounts with bank transfers, lines of credit, or charge or credit cards. PayPal deposits the purchase price, less transaction fees, directly into the sellers account. PayPal prefers transactions using bank transfers. they earn more for those transactions than for those made with credit cards since processing costs are lower. to attract more merchants and broaden usage among consumers, PayPal recently introduced new tools that allow smaller retailers to process transactions on their Web sites. the company is also piloting a virtual mastercard debit product that generates a singleuse account number so customers can pay for online purchases from their PayPal accounts at any merchant that accepts mastercard. PayPal wants to attract larger merchants its now accepted by Dell, itunes and overstock.com by expanding its presence offline at various retail locations. through an agreement between Yahoo and ebay, PayPal will be promoted prominently as the payment choice for consumers on Yahoo services, and marketed to Yahoo advertisers. enter a new competitor: google checkout. this service, introduced by google in June 006, lets online shoppers make purchases with one click at participating merchants Web sites. users enter their payment and shipping information once when creating a google login. this means theres no need to reenter this information at every site where they shop. any u.s. merchant can use this service whether or not they advertise with google. but the company is waiving all or a portion of the transaction fee for those merchants that do. most consumers who shop online use credit cards. those that use PayPal or google checkout can settle their accounts with their american express cards. as these payment models become more popular, american express and other card issuers may need to consider different ways to work with these players, and possibly create new ways to compete.

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have higher deposits and lower attrition rates, and are more profitable, Paul says. American Express cardmembers are paying some recurring bills with their cards, such as cable, wireless and Internet services, health clubs, and even rent, to name a few. Although these payments have to be set up individually with each merchant, cardmembers have the benefit of earning rewards when paying bills. The company continues to focus on both increasing the number of transactions and getting more cardmembers to take advantage of this option.
onLine consuMer PayMents: staying in tHe LooP

can determine the best product and service offers for each cardmember, such as product upgrades and tailored merchant promotions that drive spending. But new competitors and models are making inroads into online commerce. In the U.S., payment aggregators, like eBays PayPal, Google and Amazon, account for slightly more than 10 percent of online payment volume today, with potential to grow even more over the next few years. These aggregators offer consumers a tool known as an online

Consumers prefer to use their charge or credit cards when purchasing online. The majority of an estimated $300 billion spent globally online in 2005 was on plastic. American Express has a strong presence online. It is a payment choice on thousands of merchant sites everything from iTunes to Ticketmaster to online travel sites to all major retailers. Cardmembers spend more online on average, 38 percent more per transaction than our nearest competitor. New cardmembers acquired online spend 79 percent more than those acquired through traditional channels like direct mail. The Internet is also an important marketing channel for the company. Using the data and insights from our closed-loop system, we

wallet, which is a convenient and secure way to purchase online. Customers store their payment and shipping information on the wallet, which can then be used wherever they shop. Aggregators provide merchants, particularly smaller ones, with a low-cost alternative to accepting credit cards online. PayPal has taken a strong lead in this category in a short amount of time its global payment volume has grown 67 percent

annually during the past five years to $27 billion. Much of PayPals success comes from processing payments between buyers and sellers for online auctions. Buyers can fund their accounts with bank transfers, lines of credit or credit cards. Sellers also set up accounts and are charged transaction fees. So far, the biggest challenge to the PayPal model is Google Checkout, an online wallet for users who shop with Google merchants (see related sidebar on page 8). Although PayPal is a significant merchant of American Express, it also is a competitor. PayPal encourages buyers to pay with a bank transfer or a proprietary credit product because processing fees are lower than when buyers use a third-party credit card. PayPal is developing ways to use information about its customers and merchants to enhance marketing programs. American Express is looking toward the future of alternate payments and how we will grow our position as these models develop. There isnt just one approach, Paul says. Well need to consider a variety of solutions from working even more closely with online merchants to strengthening our agreements with intermediary players to exploring new ways to participate.

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Putting innovation to Work

by_Kristin Roth

What does innovation look like at American express? its giving our cardmembers access to one-of-a-kind entertainment experiences. its creating a corporate card that transformed the gasoline industry in mexico. its developing new ways for our cardmembers to use membership rewards points to pay for travel. And its finding a way to reduce customer frustration by increasing the size of their credit lines right at the point of sale. innovation is all these things and more. thats why chairman and ceo ken chenault refocused his annual awards program on innovation to recognize teams that exemplify how teamwork, motivation and creative thinking can best come together to accomplish significant results. to achieve our goal of becoming the most respected and financially successful company, we need to be even more focused on innovation, ken said. if youre going to be a market leader, you have to continue to innovate or find yourself falling behind. here are the first premier Award-winning teams of the chairmans Award for innovation.
in the past, when high-spending, creditworthy cardmembers spent over their credit limits, american express would increase the size of their credit lines at the end of the month or quarter but not before declining the charges and hitting them with a fee. the trigger line increase project team recognized that there was a better way to address this issue. cardmembers were thinking im a good customer and i use your product, so why are you declining me? says Hui-Ping chao, director, risk, information and banking. We needed to do a better job of recognizing high-value customers and treating them as such. the team developed a system where deserving cardmembers could have their credit lines immediately increased by using the data available through the closed-loop network. this information system allows american express to identify cardmembers who need a higher card limit and offer it to them instantly at the point of sale. We realized that by declining these transactions, we were losing a lot of good charge volume, Hui-Ping says. by devising a system to determine whether a cardmember was worthy of a line increase at every transaction, we were able to capture a significant amount of additional spending.
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trigger line increAse

1 Grady Wright III 2 Fan Pan 3 Hui-Ping chao 4 chelsea Reck 5 Anita Murray 6 Govind Jeyaram 7 changbin Wang 8 Jeffrey Brewer 9 Mary Richter 10 Krishna Karambakkam 11 Shivee Sharma 2 3 4 5

Developing this system was not without risk. You can have the best strategy, but if its not executed properly, it could be a disaster, Hui-Ping says. We had to take some risks initially. and then once we had running data, we used it to build a model for our criteria. i think the team did a great job implementing this model. once the technology was put in place for the consumer card network,

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it was possible to implement it in other areas like oPen. Part of being a premium service brand is understanding our cardmembers, says Jeffrey brewer, director, risk, information and banking. this service shows cardmembers we know who they are and what they need. no one else in the marketplace is doing this, so were setting the pace.

Photography_Harry Wilks

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AnY Airline AnYtime

1 chee Pae 2 Marc Pocobelli 3 Stephanie taylor 4 Matthew Rogers 5 Ufasaha Yarish 6 nick Gilbert 7 Isabel Renters 8 Kirsty Sutherland 9 Paul Scambler 10 trey neemann 11 Saquoya Harper 12 Vivek Ranade 13 Sheila Mondragon 14 clare Holmes 15 Michael Frankel 16 Lee Gowan 17 David Jackson 18 Peter taswell 19 Sohail coelho 20 trish Shepherd

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not pictured: Diana Delgado, claire Kaye and corrine ng

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traditionally, cardmembers enrolled in membership rewards obtained travel benefits by transferring their points to a partner airlines frequent-flier program or by redeeming them for travel certificates. While both options appeal to many cardmembers, they dont meet the needs of everyone. in some instances, cardmembers face blackout dates and availability restrictions imposed by airlines, or they simply dont have enough points for the travel reward they want. two teams membership rewards as Payment in the u.s. and Project freedom (the internal name for the group behind the project internationally) looked at these issues and came up with the same solution: let cardmembers make travel arrangements through american express and pay for them using their membership rewards points. this program expands cardmember options by allowing them to book any airline, hotel or cruise without being subject to blackout dates or other restrictions. they can pay using as few or as many rewards points as they like, and put the balance, if one exists, on their american express cards. this is a great example of what it means to be a world-class service brand, says Peter taswell, vice president, international consumer card and small business services, Project freedom. We responded to customers by addressing their concerns and giving them more choice. chee Pae, senior manager, consumer card services group, agrees. customers told us they wanted to be able to use airlines like american, united and northwest that are not in the mr program, she says. We asked ourselves how we could address this gap. using mr as payment is a great way to let customers use their points and increase their spending with american express. Project freedom worked closely with the travel services network and membership travel. in the u.s., membership rewards as Payment teamed up with the consumer travel network. collaborating with other divisions of the company was a complex process, but a critical one to get right. for example, the team behind membership rewards as Payment felt it was important to make redeeming points for travel a one-step process for our customers. While few competitors offer this type of redemption, the ones that do require cardmembers to call in once the charge shows up on their accounts to offset the travel charge with points. executing this project required integrating mr and ctn systems, says matt rogers, director, consumer card services group. We had to update proprietary platforms and make sure they were communicating with one another in real time so that cardmembers would not have to call us back. these projects demonstrate the power of collaborating across the blue box, Peter says. i think we won the award because we brought together american express strengths in the travel and rewards sectors and came up with something more than its individual parts.

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10 1 William edward Bonnin 2 teresa Prez Gmez 3 Alberto Gonzalez chavez 4 Lance Gulseth 5 Myriam coso Robles 6 Alejandro navarrete Prez 7 Beatriz Garciafigueroa 8 Mauricio esparza Lizrraga 9 Maria Barreiros

de Juste 10 Ulises Solis Arias 11 Alba V. Uribe 12 Mario Luna Muoz

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corporAte gAsoline cArd

mexicos $4 billion gas industry was traditionally a cash-only business. now, thanks to the creative thinking of the team behind the gasoline card, the product has become a major source of new commercial card accounts in mexico, accounting for nearly half of them in 005. for 0 years, weve established american express as a market leader in corporate spending in mexico, says beatriz garciafigueroa, vice president, global commercial card. our challenge was to create more market space. so we began assessing industries that relied mainly on cash payment and determined the gasoline industry was one of the biggest. figuring out how to convert the gasoline industry from cash to plastic was a challenging endeavor. the fuel industry in mexico is controlled by the government, which sells fuel through franchised stations and sets gas prices. this results in limited net income for the franchises. given that we couldnt charge gas station owners, we had to develop a product that commercial card clients would be willing to pay for, says myriam coso robles, manager, global commercial card. so we formed an alliance with the government and then worked very hard to create strong value propositions for the corporations. for example, the team obtained special permission from mexicos internal revenue service to issue invoices on behalf of the gas stations. this makes it easier for our commercial card clients to file for and

the AmericAn express

receive tax deductions for their gasoline expenses providing another important way for them to control and manage costs. the gasoline card team also faced internal hurdles in bringing this card to market. We developed a new system that went beyond what american express already had in place, and we needed to encourage the technology team to think differently, says alba uribe, project manager, technologies. new ideas are difficult to implement when people are focused on a structured, traditional approach, myriam says. our biggest challenge was to convince people internally that this was a good idea. thats why this win is emotionally significant to our team.

Photography_ralph gabriner

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u.s. entertAinment Access plAtform

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wanted to create a platform where cardmembers could rely on exciting entertainment experiences from us on a regular basis. so we used our partnerships in the entertainment industry to make these experiences available to a broader spectrum of customers. this is the first time cardmembers have been provided this level of access. all cardmembers are invited to participate in early-on sales, giving them a chance to buy tickets before they go on sale to the public.

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gold card-eligible cardmembers can obtain some of the best seats to concerts and broadway shows even when they are sold out. Platinum cardmembers enjoy access to the first 10 rows for events in sponsored locations and free access to selected venues viP clubs. in addition, through a partnership with ticketmaster and telecharge, cardmembers can also use membership rewards points to buy tickets. Developing reliable, top-tier access, and delivering it in a cost-

1 Laura Sullivan 2 Ida Anselona 3 Young Yun 4 Ardito Artie Ambrosio 5 Sujal Shah6 Rich Lehrfeld 7 tehani Gooneratne 8 Rob Steeger 9 Kecia Voorhees 10 John nitti 11 Michele carr

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effective manner, was easier said than done. one of the biggest challenges the team faced was figuring out how to provide access without paying large sums to entertainment providers. We bartered our communications platform and marketing expertise, says rich lehrfeld, vice president, global advertising and brand management. instead of paying fees, we promote these events and offer access to ticket buyers through our existing online marketing to cardmembers. another challenge was figuring out how to integrate technology and ensure seamless service. We worked closely with our partners to make sure our systems would work together without causing any disruptions to service, says laura sullivan, director, consumer card services group. We had to roll up our sleeves to learn their technologies and help them learn ours. the team cleared those hurdles. the programs success can best be seen in cardmember response. between 004 and 005, ticket sales grew 54 percent and charge volume increased 79 percent.

in a market saturated with credit, debit and charge cards, american express must build products that set us apart from our competitors and keep us top of mind with our cardmembers. the team behind the u.s. entertainment access Platform found a way to do exactly that. While the program launched two years ago, the team spent much of 005 expanding it through strategic partnerships with leading entertainment providers, venues and ticketing agents. these efforts translated into privileged entertainment access for hundreds of thousands of cardmembers. our cardmembers are passionate about entertainment, says rob steeger, director, global advertising and brand management. We

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Context celebrates its 10th anniversary this year of chronicling American Express successes, challenges and plans for the future.

1998

As American Express continues on its journey, Context will continue to tell the stories of where we are, where were going and the people who get us there. But before we head off, lets take a look at some highlights of the past 10 years.

Axp celebrates 150 years Building a presence in china Axp protects consumers online

the American express card turns 40 u.s. department of Justice files anti-competitive lawsuit against visa and mastercard

Axp invites banks to issue cards on our network

1999

travelers cheques branches out into prepaid cards

2000

Through it all, Context has delved into not only what was happening but also the how and why behind significant events. And because the people of American Express play such a significant role in the companys success, weve showcased their efforts and achievements.

Axp remembers 9/11 harvey golub retires moving customer service and acquisition online

1996-97

gns kicks into high gear Axp shapes its online presence

FactoiDs

Articles employees commented on the most: Profiles in Leadership (July/Aug 2004)

Axp shorts about a cardmember cat and russian-speaking parrot (July/Aug 2004)

2001

10 years of membership rewards

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> Weve added all the issues from the past 10 years to the context archive at www.amexweb.com/context. take a look and read more about some of american express most significant events.

ken chenault on delivering strong results and improving our business model

2004

small Business services rebranded as open from American express

gns continues to grow in the u.s. and around the world

2002

Airline cobrands target midsize companies mBnA becomes first gns partner in the united states after the courts rule that visa and mastercard cannot bar member banks from issuing cards on rival networks new leadership competencies emphasize risk taking, innovation and personal accountability

personal accountability and will-to-win added to our Blue Box values AeB refocuses on consumer banking

2003

A Cautionary Tale: Lessons from Enron (July 2005)

Most requested issue: remembering sept. 11 (nov/dec 2001)

number of issues published since 1996: 54 and counting

2005
farewell to Ameriprise Becoming the new American express gns partners with icBc in china

new features and enhancements to Blue from American express

2006

Page _16

Whos talking Look

Have you heard that american express employees around the world are sharing ideas for new products, discussing industry trends, and answering questions about company programs and policies? these discussions are taking place on next Chapter, the online community forum for employees at www.amexweb.com/nextchapter.

Here are few excerpts from what some of your colleagues have been talking about:

what do you have to say?

Wed like to open a discussion to get your thoughts about some of the topics covered in context. Weve posed the following questions in the Did You see this? category on the next chapter forum (www.amexweb.com/ nextchapter) and invite you to share your viewpoint with us and your colleagues. Well print a sampling of comments in an upcoming issue and pose another question for discussion. this issues cover story is about alternate ways to pay: contactless payments, electronic bill payments and noncard online consumer payments like PayPal. if you use any of these payment methods, tell us what you like or dislike about them. are you an expressPay convert, or do you still prefer to pay with cash for small purchases? When you shop online, do you pay with a credit card, PayPal or have you tried the new google checkout? We look forward to talking with you.

in July, tHoMAs bEtHKE from Phoenix, Ariz., posted:

american express should develop a product that caters to graduate students. Currently, graduate students are an underserved demographic in the borrowing and spending world. They have limited or no incomes at the present time, but a majority of them stand to join the ranks of the well paid in just a few short years. If a bank can get their products to these students before they are very strongly sought after, it could build a relationship and establish a strong brand awareness with these customers, and maintain them as they move into the ranks of the affluent. I think an interesting feature to this credit card offering would be an option that would work much like a student loan. a student could either make a payment or defer payment each month while still in school until a few months into starting their first job when payments would then be required monthly.
in April, Colin sCHott from Fort lauderdale, Fla., had this to say:

It is astounding to me the amount of separation that exists between the service Delivery Network and Travel. This siloism seems to prevent cross-marketing programs and promotions, sharing human capital, as well as sharing physical plant locations. To our customer we are one company. at times our processes and technology prevent the delivery of world-class service.
EllA lE liEvRE from sydney, Australia, responded:

one thing I found useful when first joining the company was to [meet for] 30 minutes with a manager/team leader from each of the business areas I work with, or my department interacts with. [This allowed me] to quickly get an understanding of the business, but also reduce the feeling of any barriers within the workplace.

CONTEXTCorrespoNDeNTs

ArGenTInA_carolina s martin office 54.11.4310.3511 Fax 54.11.4328.8275 AuSTrALIA_luisa s megale office 612.9271.2070 Fax 612.9271.2554 CAnAdA_audrey K adams White office 905.474.7946 Fax 905.474.8363 FrAnCe_claire f legall-rouxel office 33.1.47.77.78.45 Fax 33.1.47.77.77.83 GermAnY_ursula e Hellstern office 49.69.9797.2332 Fax 49.69.9797.2919 HOnG kOnG_susanna s Hui office 852.2.811.6325 Fax 852.2.811.2331 IndIA_vibha b bajaj office 91.124.680.1590 Fax 91.124.639.8304 ITALY_luciana b strippoli office 39.06.722.80.756 Fax 39.06.722.80.424

THAILAnd_Peera Pomkaew office 66.2.273.5019 Fax 66.2.273.0324 unITed kInGdOm_Deepa bose office 44.207.976.4677 Fax 44.207.233.0873 unITed STATeS FT. LAuderdALe, FL_stacey orange office 954.503.9519 Fax 954.503.3056 GreenSBOrO, nC_tyler J cox office 336.668.5824 Fax 336.668.5696 neW YOrk, nY_cynthia aquila office 212.640.5917 Fax 212.640.0331 PHOenIX, AZ_christa K burkhalter office 623.492.7061 Fax 623.492.7411 SALT LAke CITY, uT_steve allnatt office 801.945.5268 Fax 801.945.5675

got a storY iDea We welcome your thoughts on items and people we cover in Context features and in the following departments: update_Whatever happened to...? behind the scenes_How did we score that big win? at Work_american express employees and the jobs they do corporate citizens_putting a face on philanthropy the numbers_Quantifying our success time capsule_Mining the archives for reminders of our 156-year history please contact any of the Context correspondents (at right) with your comments.

JAPAn_sakiko a Kasegawa office 81.3.3220.6229 Fax 81.3.3220.6717 meXICO_adriana a rivera office 525.55.209.7310 Fax 525.55.209.7317 neW ZeALAnd_craig H Dowling office 649.367.4370 Fax 649.367.4358 SInGAPOre_liang may shee office 65.6880.1730 Fax 65.6294.0516 SPAIn_luis b Dupuy office 34.91.743.7229 Fax 34.902.195.111 TAIWAn_tiffany t chen office 886.2.2514.5019 Fax 886.2.8712.3836

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