American Express and Visa: Investing in premium consumer spending

American Express and Visa offer distinct investment opportunities in premium consumer spending, both outperforming the S&P 500 over the last decade. American Express operates a closed-loop system, acting as both a lender and payment processor, while Visa functions as an open-loop network, earning fees on transactions facilitated by partner banks. While Visa boasts higher profit margins and faster EPS growth, American Express offers a lower valuation and a slightly higher dividend yield, though it carries more credit risk.