Cobrand Rewards Grow TooNarrow moat

American Express (AXP) — moat facet

A quarter of American Express spending now runs on partner cards, whose rewards and payments are set across a negotiating table.

Not all rewards are Membership Rewards points. On a cobrand card the cardholder earns the partner's currency, airline miles or hotel points, and American Express pays the partner for them. In 2025 the rise in rewards expense came from "increases in Membership Rewards and cash back rewards expenses, collectively, of $1,234 million, and cobrand rewards expense of $576 million"1.

Cobrand share of billed business (%)18%201919%202025%202426%2025American Express Forms 10-K FY2019, FY2020, FY2024, FY2025 (network volumes basis in 2021-2023)
A quarter of the spending now runs on someone else's card.

Cobrand cards carry a large and growing share of the business. All cobrand portfolios together accounted for about 26% of worldwide billed business in 2025 and about 36% of Card Member loans2. In 2019 they were about 18% of billed business and 38% of loans3.

The cobrand economics are different from the proprietary ones. Amex buys the partner's currency at a negotiated price and pays the partner for new accounts and spending through business development expense. The partner brings the customer; Amex brings the card, the network and the credit.

That is a good trade for spending and a weaker one for margin. A cobrand cardholder is loyal first to the airline or the hotel, and at renewal time the partner knows it. Business development expense, much of it "increased partner payments"4, rose from $3,762 million in 2021 to $6,457 million in 202556.

The largest single relationship, Delta, has its own page, Delta: Thirteen Percent of the Spending, under Major Clients. Here the point is structural: as cobrand share rises, more of the rewards bill is set in negotiations with partners rather than decided by Amex alone.

Some cobrand agreements also carry a floor. Amex says certain agreements require it to make "a certain level of minimum payments over the life of the agreement"7, satisfied mainly by payments based on cardholder spending and new accounts. If spending fell short, Amex would pay the partner the difference in reward points8. The partner is partly protected from a downturn; Amex is not.

The cobrand share of billed business is the figure to watch. It rose from about 18% in 2019 to about 26% in 2025910; a figure above 30% would mean close to a third of the spending on the network was priced by a partner's bargaining power rather than by Amex's.

Moat trajectory: Narrowing

Cobrands 18% of billed business in 2019, 26% in 2025; cobrand rewards up $576M in 2025.

The number that tests this moat
Reported
Cobrand share of worldwide billed business
About 26% (2025), from about 18% (2019)

How much of the spending is priced by partners; above 30% would put a third of the network in negotiated hands.

Source: American Express Form 10-K, FY2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
Partners Negotiate With the Moat Money
Every cobrand renewal is a negotiation over how much of the merchant fee the partner keeps.
References
  1. ReportedIn 2025 the rise in rewards expense came from "increases in Membership Rewards and cash back rewards expenses, collectively, of $1,234 million, and cobrand rewards expense of $576 million".
    American Express Form 10-K for fiscal 2025 - Card Member rewards, Membership Rewards liability, business development and Card Member services. — FY2025 · publ. 6 February 2026 · source ↗
  2. ReportedAll cobrand portfolios together accounted for about 26% of worldwide billed business in 2025 and about 36% of Card Member loans.
    American Express Form 10-K for fiscal 2025 - Delta, cobrand partners and partnership concentration. — FY2025 · publ. 6 February 2026 · source ↗
  3. ReportedIn 2019 they were about 18% of billed business and 38% of loans.
    American Express Form 10-K for fiscal 2019 - five-year selected financial data (2015-2019), the Delta renewal through 2029 and the three former segments. — FY2019 · publ. February 2020 · source ↗
  4. ReportedBusiness development expense, much of it "increased partner payments", rose from $3,762 million in 2021 to $6,457 million in 2025.
    American Express Form 10-K for fiscal 2025 - Card Member rewards, Membership Rewards liability, business development and Card Member services. — FY2025 · publ. 6 February 2026 · source ↗
  5. ReportedBusiness development expense, much of it "increased partner payments", rose from $3,762 million in 2021 to $6,457 million in 2025.
    American Express Form 10-K for fiscal 2023 - income statements for 2021-2023 on the current presentation, segment results for 2022, discount revenue as a share of billed business. — FY2023 · publ. February 2024 · source ↗
  6. ReportedBusiness development expense, much of it "increased partner payments", rose from $3,762 million in 2021 to $6,457 million in 2025.
    American Express Form 10-K for fiscal 2025 - Delta, cobrand partners and partnership concentration. — FY2025 · publ. 6 February 2026 · source ↗
  7. ReportedAmex says certain agreements require it to make "a certain level of minimum payments over the life of the agreement", satisfied mainly by payments based on cardholder spending and new accounts.
    American Express Form 10-K for fiscal 2025 - Delta, cobrand partners and partnership concentration. — FY2025 · publ. 6 February 2026 · source ↗
  8. ReportedIf spending fell short, Amex would pay the partner the difference in reward points.
    American Express Form 10-K for fiscal 2025 - Delta, cobrand partners and partnership concentration. — FY2025 · publ. 6 February 2026 · source ↗
  9. ReportedIt rose from about 18% in 2019 to about 26% in 2025; a figure above 30% would mean close to a third of the spending on the network was priced by a partner's bargaining power rather than by Amex's.
    American Express Form 10-K for fiscal 2019 - five-year selected financial data (2015-2019), the Delta renewal through 2029 and the three former segments. — FY2019 · publ. February 2020 · source ↗
  10. ReportedIt rose from about 18% in 2019 to about 26% in 2025; a figure above 30% would mean close to a third of the spending on the network was priced by a partner's bargaining power rather than by Amex's.
    American Express Form 10-K for fiscal 2025 - Delta, cobrand partners and partnership concentration. — FY2025 · publ. 6 February 2026 · source ↗
Sources
Generated September 28, 2026