AmEx's Next Conquest: Bank-Issued Cards

Still the business is small when compared to Visa and MasterCard's penetration, he cautions.

"In the long term, we're positive on AmEx. We think the strategy they've taken recently talking to third parties to help and improve acceptance is a good thing, because they have not been able to do that traditionally," Maurer says. He has a buy rating on American Express.

But challenges remain for the company. Not only will it have to deal with a worsening credit environment taking a toll within its proprietary card metrics, which do carry credit risk, American Express must also continuously push for further acceptance of its cards -- by both merchants -- particularly in the small and midsize space -- and more banks, analysts say.

"They will have to worry [about] competing with themselves. American Express would like to tap into both sources of earnings," Derman says, noting the company must master a delicate "balancing act" between its proprietary card business and bank partnerships.

It has been an uphill battle for American Express -- and Discover Financial Services(DFS Quote - Cramer on DFS - Stock Picks), which is also suing Visa and MasterCard -- to gain a foothold in the bank-issued card space.

In 1998, the Justice Department sued Visa and MasterCard for limiting competition in the U.S. credit card market. Four years later, a U.S. District Court judge ruled that the two electronic processors could no longer bar member banks from issuing cards on rival networks. Visa and MasterCard had tried to appeal the ruling many times, but was finally rejected by the Supreme Court in 2004.

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