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The short answer is that American Express cards have a different PAN format than Visa, MasterCard and Discover because they offer a different kind of financial service. American Express cards are "travel and entertainment" cards.The digits on the front of almost all credit cards are known as the Primary Account Number, or PAN. Almost all credit card companies generate PANs (including debit cards but not including merchant cards) according to ANSI Standard X4.13-1983. This American Natural Standards Institute protocol for numbering is essentially a standardized industry convention. It helps digital POS, financial systems, banking databases and similar system design.The anatomy of ANSI PANs is mostly straightforward, and reveals the answer to your question. The first digit identifies the type of card. A 3 is a "travel and entertainment" card, a 4 is a Visa card, a 5 is a MasterCard card, and a 6 is a Discover card. T&E cards are charge cards originally provided for businesses to deal with operating expenses for employees, like hotels, car rentals, plane tickets, meals, etc. The key thing about all T&E cards is that they are on 30-day charge cycles, payment due in full at the end of each cycle. Diners Club (later bought by Discover) issued the first T&E in 1950 and American Express followed shortly after in late 1957/early 1958. All American Express cards, technically, are T&E cards, and have become such a large category, and so specialized, that they have their own second digit: 7. All American Express cards begin with '37,' followed by currency indicator (digits 3, 4), account number (digits 5-11), card number within account (digits 12-14), and check digit (digit 15).The difference in length stems from the fact that Visa, MC and Discover PANs have to reference bank number, whereas American Expresses just list account number. Bank numbers have a specific format, much like PAN formatting, with its own rules and standards (another answer entirely). Because American Express issues T&E accounts/offers T&E financial services, they do not have to conform to the bank number format that Visa/MC/Discover do.Over time, the financial distinction between T&E service and Visa/MC/Discover credit service has become less prominent and is pretty much unknown to consumers. But they are still technically distinct and merit a unique ANSI classification.

So let me tell you the story of a secret government plot. It's an interesting story, I promise.I sell a computer sex game called Onyx from one of my Web sites. Well, I say sell...it's a free game, 2-6 players, tons of fun. You can register the game to unlock higher levels. I've been selling it since 1996 or so.A couple years ago, I was banned by my credit card merchant account underwriter, Best Payment Solutions. I'd been with them for more than ten years with only one complaint, a rather impressive record--but they told me they were canceling my account. Not to worry, though--they'd been bought by another merchant services provider, Vantiv, and they'd just reopen my account with their parent company if I filled out some forms.I filled out the forms and waited. Then I got a call from my account manager. "We can't open a new account for you," they said."Why not?" I said."Risk reasons," they said."What risk reasons?" I said. "I'm in the lowest risk tier you guys have. I have a long history with you. What's going on?""We can't talk about it. We can't give you any more information," they said. "Goodbye."I had to scramble to find a new merchant account underwriter, and my Web site was out of commission for a month. I finally found a new company. They asked me why I was changing account underwriters. I told them the story."Ah," they said. "Operation Choke Point. Don't sweat it. We'll give you an account.""What the hell is Operation Choke Point?" I said. "That sounds like something from the script of a particularly badly written Hollywood B movie starring Wesley Snipes." (Okay, I didn't say the last part, I just thought it.)So it turns out that the US Justice Department ran this thing called Operation Choke Point for a couple of years. The goal? Pressure banks and credit card companies into shutting off bank and payment services to businesses that were legal, but considered "undesirable."“Operation Choke Point”There was a list of business categories that were targeted: escort services, payday loan places, porn sellers, porn performers, and so on. I guess the sex game qualified me as a "porn business" or something. (There's no porn in the game, but it is a sex game, so I reckon to a government bureaucrat that's close enough.)Crucially, the folks responsible for Operation Choke Point miscalculated. They made a critical error: they included gun resellers on the list of "undesirable businesses." Gun merchants who suddenly found themselves without banking services complained to their representatives, who (this being the country it is) launched an investigation.When it was discovered that yes, the Justice Department was indeed pressuring banks to stop providing banking services to gun dealers, there was a howl of fury from the Right that would have shaken Lucifer from the deepest, darkest pit. This was exactly the sort of malfeasance a certain breed of American citizen is always on hair-trigger alert for; oh my, we do love our guns here in ‘Murica.The Justice Department quickly issued a "clarification" that the directive to choke off financial services to undesirable merchants wasn't reeeeeaaaallly a directive to, you know, choke off financial services to undesirable merchants, and the whole thing quietly disappeared, save for some furious op-eds in a handful of newspapers.To this day, I firmly believe that the reason Republican Party didn't raise a much bigger stink over it (think Benghazi) is that they were pissed about the gun thing, sure, but they actually agreed with the rest of it--you know, going after the evil sellers of adult stuff that has to do with sex. I don't for a second think they would have had my back had Operation Choke Point been aimed only at adult businesses.But, you know, whatever.

In short:Financial Resolution and Deposit Insurance (FRDI) Bill, 2017 is similar to the Insolvency and Bankruptcy Code, 2016. FRDI deals only with the companies that are in the financial sector entities such as banks and insurance companies etc. The Insolvency Code Act deals with companies in all other sectors (Non-financial institutions). Purpose of the Bill is to create a resolution regime for financial institutions when they face crisis without creating financial burden for the tax payers.Preamble of the BillA BILL to provide for the resolution of certain categories of financial service providers in distress; the deposit insurance to consumers of certain categories of financial services; designation of systemically important financial institutions; and establishment of a Resolution Corporation for protection of consumers of specified service providers and of public funds for ensuring the stability and resilience of the financial system and for matters connected therewith or incidental thereto.IntroductionIn Budget Speech 2016-17, the Finance Minister had announced:“A systemic vacuum exists with regard to bankruptcy situations in financial firms. A comprehensive Code on Resolution of Financial Firms will be introduced as a Bill in the Parliament during 2016-17. This Code will provide a specialized resolution mechanism to deal with bankruptcy situations in banks, insurance companies and financial sector entities. This Code, together with the Insolvency and Bankruptcy Code 2015, when enacted, will provide a comprehensive resolution mechanism for our economy.”The Bill was referred to a Joint Committee of Parliament (Chair: Mr. Bhupender Yadav) on August 10, 2017.The committee consists of members from various regulators like RBI, SEBI, IRDA, PFRDA to submit a Bill on resolution of financial firms. The Committee submitted a draft Bill named as “The Financial Resolution and Deposit Insurance (FRDI) Bill”.Coverage:The Bill will apply toa.Banksb. Insurance Companiesc. Stock Exchangesd. Depositoriese. Payment systemsf. Non-banking financial companies and their parent companies.The central government may notify any other entities or funds to be covered under the Bill.Key Objectives and Features of the Bill The Bill establishes a ‘Resolution Corporation’ to monitor financial firms, anticipate risk of failure, take corrective action, and resolve them in case of such failure. The Corporate will also provide deposit insurance upto a certain limit, in case of bank failure.The ‘Resolution Corporation’ or the appropriate financial sector regulator may classify financial firms under Five Categories, based on their risk of failure. These categories in the order of increasing risk are:i) Lowii) Moderateiii) Materialiv) Imminent andv) CriticalThe Resolution Corporation will take over the management of a financial firm once it is classified as ‘Critical’. It will resolve the firm within one year (may be extended by another year).Resolution may be undertaken using methods including:i) Merger or Acquisitionii) Transferring the Assets, Liabilities and Management to a temporary firm, oriii) LiquidationIf resolution is not completed with a maximum period of two years, the firm will be liquidated. The Bill also specifies the order of distributing liquidation proceeds.Important Provisionsl Systemically important financial institutions (SIFIs): The central government may designate a financial firm as a SIFI. This would include financial firms whose failures may have a significant impact on the stability of the financial system.l Offences: The Bill specifies penalties for certain offences committed by members of a financial firm. These offences include concealment of property and destruction or falsification of evidence. Penalties will vary based on the nature of the offence, with the maximum penalty being imprisonment for five years, along with a fine.l Funds: The Corporation will constitute three Funds: (i) Corporation Insurance Fund for deposit insurance, (ii) Corporation Resolution Fund for resolution expenses, and (iii) Corporation General Fund for all other functions.l Bar on jurisdiction: The Bill prohibits any court or tribunal from entertaining matters related to the decisions of the Resolution Corporation or regulators, unless specified in the Bill.Details of Risk based ClassificationThe Board in consultation with the Appropriate Regulator has been empowered to classify the covered service provider into five categories of risk to viability viz., low, moderate, material, imminent and critical. Such classification shall be made after taking into consideration the adequacy of capital, assets and liability; asset quality; capability of management; earnings sufficiency; leverage ratio; liquidity of the covered service provider; sensitivity of the covered service provider to adverse market conditions; compliance with applicable laws; risk of failure of a holding company of a covered service provider or a connected body corporate in India or abroad.The five stages of risk to viability framework:l Low risk to viability - The probability of failure of a covered service provider is substantially below the acceptable probability of failure.l Moderate risk to viability - The probability of failure of a covered service provider is marginally below or equal to acceptable probability of failure.l Low and moderate risk to viability - Resolution Corporation shall not have power to investigate or enter the premises and call for information/ documents unless the covered service provider has been classified as imminent or critical. However, SIFIs are required to submit the ‘resolution plan’ and ‘restoration plan’ irrespective of the risk of viability. Also, such companies can be jointly inspected by the Resolution Corporation and the Appropriate Authority.l Material risk to viability - The probability of failure of a covered service provider is marginally above acceptable probability of failure.If a covered service provider has been classified as ‘material risk to viability’, such entity shall submit a ‘resolution plan’ and ‘restoration plan’ to Resolution Corporation and Appropriate Authority, respectively, within thirty days of such classification. If the covered service provider has been classified as ‘material risk to viability’ by the Appropriate Regulator, and if theBoard has difference in the opinion, then the Board shall record its reason in writing and convey the same to the Appropriate Regulator. Also, the Board may conduct independent inspection, if it continues to hold a different view.l Imminent risk to viability - The probability of failure of a covered service provider is substantially above the acceptable probability of failure.The Resolution Corporation has been vested with the power to classify in the category of ‘imminent’ risk to ability, if the covered service provider fails to submit a Resolution Plan to the Corporation after being ordered to so or it is determined that there has been fraud in the business of the covered service provider. The Appropriate Authority as well as the Resolution Corporation has power to classify the covered service provider into this category; however, in case of central counterparties, only an Appropriate Authority has been authorized to classify into fourth stage of categories.l Critical risk to viability - The probability of failure of a covered service provider is substantially above the acceptable probability of failure. On being classified as ‘critical’ risk to viability, the procedure for resolution shall commence and the Corporation shall be deemed to be a receiver of such covered service provider.Monitoring and Resolution of Financial FirmsThe Corporation and regulators will monitor financial firms based on their risk of failure. As this risk increases above acceptable levels (under ‘material’ or ‘imminent’ categories), the Corporation or the regulator may direct the firm to take certain actions to mitigate risk of failure. These include:(i) Preventing the firm from accepting deposits,(ii) Prohibiting it from acquiring other businesses, or(iii) Increasing its capital.Further, firms in the ‘material’ and ‘imminent’ categories will formulate resolution and restoration plans. The Corporation may supersede the board of a firm, if it is classified under the ‘imminent’ or ‘critical’ categories, for a maximum period two years.Liquidation and Distribution of AssetsThe Corporation will require the approval of the National Company Law Tribunal (NCLT) to liquidate the assets of a service provider. Proceeds from the sale of assets will be distributed in the following priority order.Bail-inFinancial firms include banks, non-banking financial companies, insurance companies, pensions funds, stock exchanges, and depositories. These firms accept deposits from consumers, invest these funds, and provide loans. Often these firms borrow from each other. Failure of a firm may result in adverse consequences for other financial firms, and could trigger off system-wide financial instability.High stake in distribution of Financial Assets in India is Banks i.e., 63% and their portfolio of deposits as on 31st March, 2016 is as follows:In India out of the term deposits a/cs, 67% of the total Term Deposit A/cs are of less than Rs.1 lakh, who holds only 8.6% of the Term Deposit in terms of value. Thus, even if any banks every hypothetically fail, then it would not affect the small depositors at all, as it covered through DICGC.As per the data mentioned above, the average balance per term deposits a/c is Rs.2.54 lakh, while the overall average balance (including Savings Bank, Current Account & Time Deposit is only Rs.58,316). On the other hand, the term depositors of above Rs.15 lakh as per RBI, SBI Research is only 1.3%, who holds 55% in terms of amount of the total term deposits of the banking system.To be fair to banks, the DICGC should allow the premium payable by the banks to be calculated only on the amount of cover available and not the entire assessable deposits of customers, as is being currently done. This will improve the profitability of the banks.The resolution methods of FRDI Bill which spread confusion among depositors is the ‘bail-in’ clause, where the financial firms / companies issue securities in lieu of the money deposited. It means, in case the firm’s financial situation deteriorates, deposits could be converted in securities such as shares in the bank. However, the truth is that the risk is much less in the proposed bill. Currently, DICGC provides deposit insurance of upto Rs.1 lakh. and rest of amount is forfeited in the rare event of the bank failure.Data on Cross Country Deposit insurance Coverage limit shows that Deposit insurance coverage in India is one of the lowest at Rs.1 lakh / $1,508 / 0.9 times India’s per capital income.In India Bank failure is almost non-existent and till now the claims from DICGC is very few. Mostly, such claims have been raised only due to failure of few Co-operative Banks.ConclusionFRDI Bill 2017 provides for specialized resolution mechanism of certain categories of financial service providers and establishment of Resolution Corporation which will contribute to the stability and resilience of the financial system. The following are the advantages of FRDI Bill 2017 to all stakeholders of various Financial Service Providers in India. The bill envisages inculcating discipline among financial service providers in the event of financial crisis. It promotes “Ease of Doing Business” in the country. Improve financial inclusion and increase access to credit, which may lead to the reduction of the cost for obtaining credit. Increased access to finance enhances enterprise growth, which in turn leads to preserving employment, growth and the creation of new job opportunities. The FRDI Bill will be a win-win for all with all such suggested changes to make it more depositors friendly. It can benefit a large number of retail depositors as it seeks to decrease the time and costs involved inresolving distressed financial entities. Help in maintaining financial stability in the economy by ensuring adequate preventive measures, as well as provide necessary instruments in an event of crisis. Once implemented, the Bill together with the Code will provide a comprehensive resolution framework for the economy.