While the mobile payment buzz has lately centered around contactless mobile payments using near-field communication technology, American Express today unveiled Serve, its own version of a digital wallet through which consumers can send and receive card-based and person-to-person payments on mobile phones, online and by card. Similar to PayPal, consumers set up an online Serve account and fund it from an existing credit or debit card account. They also receive a Serve debit card that can be used to withdraw cash at ATMs and make purchases at retailers that accept American Express cards. This setup lacks the tap-and-pay or wave-and-pay ease of contactless mobile payments (consumers must do some typing of an account number or email address), but has the advantage of being usable today.
"The concept is very practical," says Gwenn Bezard, co-founder and research director at Aite Group. "It's great that Google, card networks and other players are pushing NFC, and ultimately I think that will be the way to go. But we will have a few years in the interim. American Express has come up with something very practical that you can start using today."
Another point in American Express's favor: it only has to win over consumers, whereas anyone trying to move forward an NFC mobile payment mechanism has to get mobile carriers, handset manufacturers, merchant terminal manufacturers, merchants, card issuers, card networks and consumers all on board with the idea. "With American Express' approach you just need to tell consumers about it and wean enough of them to get the ball rolling," Bezard says. "It's not easy, but it's easier to sell one stakeholder."
According to Jason Hogg, senior vice president and general manager of Serve Virtual Enterprises, Serve is a cloud-based payment platform on which any consumer (American Express cardholder or not) can set up and fund a master account through any mechanism and use those funds to make P2P, debit and credit card payments on a phone or website. Applications are available today for iPhone and Android phones; NFC compatibility is a possibility for the future. Consumers can make payments to other Serve-using consumers (a nanny, say or a friend) on a mobile phone using just the recipient's email address.
Transactions are protected by the requirement of a PIN number, Hogg says. Payments made between bank accounts are transmitted by ACH, merchant payments are cleared through the American Express settlement system.
Why should consumers set up a new account at Serve, when most already have multiple bank and card relationships? "I think there's tremendous fragmentation in the industry, there are lots of other solutions that do one little piece or another," Hogg says. "Serve is designed to move with the consumer throughout their day in a flexible manner, as they transact online, person to person, and on social networks. It's also completely agnostic as to how it's funded and flexible as to how it's used."