) is a world leading financial services firm offering consumers
charge and credit card-based payment products along with travel
services to consumers and businesses across the globe. American
Express has just recently launched a digital payment and commerce
platform called, Serve which brings it in direct competition with
EBay's e-wallet service, PayPal. Visa (
) also released a personal payments service and MasterCard (
) should launch a personal payments.
How it Works
Serve offers consumers prepaid accounts that can be funded by
debit, credit, charge card, bank account or transfers from other
Serve accounts. Serve customers can shop online and can even send
money to each other via smartphones. Serve (prepaid) accounts can
be accessed via Serve Apple iOS and Android applications, via
serve.com and through Facebook. Serve accounts come with a plastic
card, which, like any American Express charge or credit card, can
be used at any brink-and-mortar retailer that accepts American
Fills Debit Card
American Express payment products portfolio has historically
been at a disadvantage due to the absence of a debit card product.
American Express issues charge and credit cards but not debit
cards, which are linked with the consumers' checking accounts.
Due to the volatile and high interest rates often in excess of
18% (annualized) on credit card debt, consumers have been using
less credit in the recent years. Simultaneously, debit cards, which
facilitate the payment process but come with no corresponding
interest expense, have grown sharply. In the U.S. alone, spending
on debit cards grew by 15% in 2010, compared to 6.3% for credit
cards. With Serve, American Express can now address consumers who
would have otherwise used debit cards or checking accounts for
their day-to-day expenses.
Mobile Device Revolution
While mobile payment is still in a nascent stage, given over 4.8
billion mobile phone users worldwide, the opportunity is
tremendous. Mobile payment users grew 70% to 73.4 million in 2009
and are expected to breach 190 million by 2012.
With such growth in the number of mobile phone users, it doesn't
come as a surprise that the transactions via mobile phones are
expected to breach $110 billion by 2013 ATM cash withdrawals will
cost $2 per withdrawal with the first withdrawal every calendar
month as free.
See our full Trefis analysis of American