American Express has escaped serious harm from the recent and massive Target data breach, CFO Jeff Campbell told investors Jan 16.
"We have seen minimal exposure thus far," Campbell said during American Express' conference call to discuss fourth-quarter earnings. "We have fraud protections in place and are taking targeted actions as needed."
Campbell did not elaborate on what those measures were, but a statement on the company's website said consumers are not liable for losses and the company would contact customers if it spots fraudulent activity.
Target reported that the holiday-season data breach affected 40 million cards nationwide. The retailer later disclosed that an additional set of personal information belonging to 70 million people was also exposed. A number of card issuers restricted card use in the wake of the Target breach, while about half of U.S. banks reissued cards after the breach.
American Express' closed-loop model—the company acts as an issuer, merchant acquirer and card network—is helpful in shielding the company from large data breaches, Campbell said. "It gives us advantages here in terms of managing things," he said.
It's also too early to ascertain the industry's next step in responding to the data breach, he said. Some companies are fast-tracking their adoption of EMV-chip cards, which are more difficult to counterfeit, but Campbell said there are other technological and strategic measures that can reduce fraud risk. "The breach may spur greater interest in [these measures]," Campbell said.
American Express reported fourth-quarter 2013 net income of $1.3 billion, up from $637 million in fourth quarter 2012. The 2012 numbers were diluted by a restructuring charge that stemmed partly from job cuts, which were primarily in travel services. Its revenue rose 5%, to $8.5 billion.
The company's U.S. card services business' net income rose 104%, to $864 million, in the fourth quarter from a year earlier. Its international card services business' income rose 8%, to $103 million.
The company's recent client wins include a prepaid card sold by Walmart and deals with Wells Fargo and U.S. Bancorp to issue American Express cards, said CEO Kenneth Chenault in a press release that accompanied the earnings report.