The payment card industry encompasses organizations and institutions that store, process and transmit cardholder data, with major brands such as American Express, Mastercard Inc, Visa Inc and others. In this blog post, we provide insights into the competitive environment of the payment card industry with a focus on American Express, with regard to patent holdings. Using our industry-proven, scientifically validated LexisNexis® PatentSight® Patent Asset Index, we find that the company has fallen behind its competitors despite a constant patent portfolio development.
American Express divested a large part of its portfolio to Dominion Harbor Enterprises in mid-2018. Dominion Harbor Enterprises is a Non-Practicing Entity (NPE) offering “IP transaction and advisory services” which include patent sales and licensing. According to their website they have not yet started marketing the American Express portfolio, however, given the scope of the sale, it is likely many companies operating in the digital transaction services arena might have exposure to these assets.
Competitive development in the payment card industry
To truly capture the development from American Express, we need to include not just the portfolio as it is today, but also this divested portfolio. Before 2010, American Express and their classic competitors had a similar Patent Asset Index, however, this has changed in more recent years. Visa’s portfolio can be seen to grow pre-2010, and Mastercard’s post-2010, while the American Express portfolio remains relatively flat. The chart below shows the current American Express patent holdings as well as their entire portfolio, including patents originally applied for, which, however, are not currently owned by them
American Express falling behind in newly developing transaction methods
On inspection of the technologies in which American Express and its competitors are active, there are some notable differences. The CPC technology classes H04L 63, H04L 9 and H04L 2209 all cover topics related to secure communications and cryptography. These classes are those typically related to blockchain and other newly developing transaction methods. It appears that these are the areas where American Express is falling behind its peers.
If this development continues it may be that American Express will fall behind. Moreover, in the digital age where the barriers to enter fields previously dominated by large incumbents, American Express might be left wanting.
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About the author: William Mansfield
William is the Head of Consulting and Customer Success for LexisNexis PatentSight. Responsible for overseeing the negotiation, creation, and delivery of PatentSight’s global consulting work along with managing the Customer Success team.