Charging in Latin America - International - Gonzalo Ruiz, head of Latin American operations for American Express's Global Network Services

South Florida CEO, Feb, 2003 by J.P. Faber

Economic doldrums in Latin America? Don't tell that to Gonzalo Ruiz, the hard charging head of American's Express' GNS division. He's bent on grabbing new market share in the region, especially among the elite who are still spending.

Q: Gonzalo Ruiz is a case study in the art of competition. He is ready to go head to head with anyone, be it Visa, MasterCard or American Express itself, the company for which he runs a division. He is even competitive with himself; after undergoing quadruple bypass heart surgery, he was running 4 miles every other day within a couple of months, matching his previous performance. They are still talking about him at Mt. Sinai.

"Survival does not belong to the fittest but to those who are willing to adapt," says Ruiz, who runs the Latin American operations of American Express's Global Network Services (GNS) from an office in Miami Lakes.

At 57, Ruiz has done a bit of adapting himself -- starting with his arrival in Key West as a teenage refugee from Cuba. His latest mission may prove the best adaptation of all: running a maverick division of American Express that is suddenly responsible for issuing most of the company's new cards in Latin America -- 61 percent of them in 2002. It is now responsible for 39 percent of the total AmEx cards in the region.

This is no mean feat for a division less than five years old. Originally conceived in 1996 by former American Express chairman Harvey Golub, ONS was created to partner with key banks that would then issue cards themselves -- and in some markets help build the Amex merchant network. At the time, the idea ran against Amex corporate practices. Unlike Visa and Master-card, which are non-profit membership organizations of banks which issue their own cards, American Express is a centralized, for-profit corporation. Prior to GNS, only Amex itself issued cards.

Gonzalo -- who had run Amex operations in Puerto Rico and was, in 1996, general manager for Latin American operations outside of Brazil, Argentina and Mexico -- was given the job to head GNS for the region. The division was fully functioning by 1998; today it has 30 banking alliances in 17 nations in Latin America and the Caribbean.

Ruiz's battle plan was to start in the smaller countries, places like Ecuador, Colombia, Chile and the nations of Central America. There, Amex had no in-country corporate presence, and banking partners were granted licenses to both issue cards and build merchant networks. The "big three" nations of Argentina, Brazil and Mexico would follow. There, where Amex was already well grounded, banking allies were allowed only to issue cards.

"The idea was that, rather than being just ourselves in the marketplace, we would selectively work with a number of high-power partners," says Ruiz. "The strategy was that, in three to five years in any particular country, we would like to have 15 percent of the plastic and 25 percent of the billings."

Ruiz is not there yet, but he has made impressive gains, especially in places where Amex was little-known. In Central America, for example GNS' partners jumped the number of establishments accepting AmEx cards from 5,800 to 62,000 in one year. In Ecuador, AmEx's local partner, Banco Guayaquil, increased cards issued from 28,000 to more than 100,000 last year.

In the larger markets, Ruiz's GNS division has so far marched into Argentina and Brazil, signing on six and five banking partners respectively. These GNS allies are now issuing more cards than the corporate Amex offices. "We are two competing companies within those countries," says Ruiz. "They have their strategies for growth, as do we."

Chief among those strategies is Ruiz' determination to focus on the affluent socio-economic A and B classes, versus the aggressive push by competitors (especially Visa) to broaden their appeal to all classes, especially with use of debit cards.

That elite strategy is revealed in the numbers. According to payment systems trade publication The Nilson Report, yearend 2001 figures (the latest available) show that while only 3.3 percent of cards in the region were Amex, they were responsible for about 7 percent of all purchase transactions -- and almost 14 percent of purchase volume.

"We don't want to be with everybody, we don't wont to be like Visa and Master Card," says Ruiz. "We want to be American Express, and we are winning in the segments we are playing in." Let the games continue.