) followed in Visa's (
) steps and announced a digital payment and commerce platform
dubbed Serve, which enables the consumers to make purchases and
person-to-person payments online via mobile phones and at merchants
that accept American Express cards. MasterCard (
) is also planning to launch its own offering for personal
We estimate that American Express derives 73% of our
$49.61 price estimate
from card transaction & execution fees while Visa derives
almost 29% of its
$85.03 Trefis price estimate
from transaction fees.
Serve at a Glance
American Express' Serve is a new account that a consumer can
fund through bank accounts, credit or debit cards. The money in the
Serve account can be used to buy items online, pay other Serve
accounts or get cash from ATM via a new Serve card. A customer can
set up his or her Serve account online in about 5 minutes and set
up sub accounts for spouses or kids making it an attractive option
for parents who want an easier way to track their kid's allowance.
Serve works wherever Amex cards are accepted making it easy for
existing Amex customers.
Card Companies Taking on Paypal
American Express acquired Revolution Money in 2010 for about
$300 million and integrated its technology which resulted in Serve.
Card companies have long recognized the need to provide a digital
payment option to compete with Paypal for personal payments and in
order to tap the boom in demand for mobile payment solutions.
Paypal is the current leader in the personal payments market
with more than 94 million active accounts. Recent startups such as
Venmo and Square have also gained popularity and helped highlight
the growth opportunity in this market, which helped motivate Visa
and American Express to pursue their own digital initiatives. Serve
is similar to Paypal in several ways in that it issues a separate
card that is linked to bank or credit card accounts and can be used
to make purchases and ATM withdraws.
One small area of difference: Serve allows users to fund their
Serve accounts with a credit card for a fee (2.9% plus 30 cents).
Paypal allows users to pay for specific items with a linked credit
card, but it will not allow users to fund their Paypal accounts
with a credit card.
Visa also recently announced that it will venture into the
personal payments market and offer the ability to transfer or
receive funds directly to a Visa credit, debit or prepaid card
accounts in the U.S. Visa's offering differs from American Express'
Serve as Visa doesn't require consumers to open a new account and
doesn't issue an additional card which can be used while shopping
or to get cash from ATM.
With the launch of Serve and Visa's personal payments service,
the companies are well positioned for the growth in the personal
payments and mobile payments markets, and by tapping this growth,
they can meaningfully grow the number of transactions
See our full analysis for Visa and