American Express
Built a walled garden for high-earners and proved that closed-loop ecosystems can outperform open networks through mutualistic specialization.
Most payment networks are open platforms connecting any issuer to any merchant. American Express built a walled garden - and charges premium rent because the garden attracts high-value species. The company operates a closed-loop network where it controls both card issuance and merchant relationships, processing $1.72 trillion in transactions in 2025. This isn't just vertical integration; it's ecosystem control optimized for a specific niche: 55% of U.S. Amex cardholders earn over $200,000 annually.
The closed-loop model creates costly signaling at scale. The Platinum card carries an $895 annual fee in 2025 (up 29%) while delivering $3,500 in benefit value, generating 43.5% of total revenue. Carrying the card signals financial capacity - not wealth exactly, but access and spending power. Merchants pay higher fees (2-3.5% vs. 1.5-2.5% for Visa/Mastercard) for access to these high-value customers. The signal works because the cost is real: Amex maintains 99% merchant acceptance in the U.S. despite premium pricing, achieving 25.1% global premium card market share and 95% customer retention on flagship products.
The biological parallel: mutualistic specialization where network orchestrator and participants coevolve. Amex invests in cardholder benefits (airport lounges, concierge services, travel credits) that increase merchant attractiveness, while merchant fees fund the benefits that retain cardholders. Unlike open networks competing on ubiquity and low fees, Amex competes on selectivity and premium economics. The lesson: ecosystems don't need to be open to be dominant. Sometimes the most profitable network is the one that deliberately excludes low-value participants to concentrate benefits among high-value ones - as long as you control enough of the value chain to enforce the exclusivity.