Visa vs. American Express: American Express Sees Strong Growth Amid Credit Risk

Visa and American Express are two leading financial companies that facilitate numerous transactions daily. Despite operating in the same industry, they have distinct business models.

One key difference is their revenue generation. Visa earns a small percentage of each transaction it processes through its payment network. In contrast, American Express operates as a lender, collecting interest on credit card debt and losing money when consumers default on their balances.

This model results in higher operating expenses for American Express, contributing to lower net profit margins compared to Visa. Visa's fiscal 2026 third quarter saw a 48.4% net profit margin, while American Express reported a 16.8% net profit margin.

However, American Express has been growing faster than Visa and trades at a lower valuation, with a price-to-earnings (P/E) ratio of 20 compared to Visa's 32 P/E ratio.