American Express Case study 08-18

American Express case study

If the president of American Express has that sort of trouble, just think what ordinary travelers face. Something has got to be done about it.”¹ What American Express did was to create the traveler’s check—and from that innovation evolved a robust business model with all the elements of a good story: precisely delineated characters, plausible motivations, and a plot that turns on an insight about value.

The story was straightforward for customers. In exchange for a small fee, travelers could buy both peace of mind (the checks were insured against loss and theft) and convenience (they were very widely accepted). Merchants also played a key role in the tale. They accepted the checks because they trusted the American Express name, which was like a universal letter of credit, and because, by accepting them, they attracted more customers. The more other merchants accepted the checks, the stronger any individual merchant’s motivation became not to be left out.

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