AmEx Debuts Mobile Payment System

P2P financial interchange, hearkening mobile payment systemWe told you last month how Visa plans to roll out a system that would let people pay each other without cash or checks by using their cell phones. The innovation would let people who wanted to pay their babysitter, for instance, or a colleague who grabbed them coffee simply by accessing their mobile phone number or email address. Now, American Express has announced a competing peer-to-peer (P2P) payment tool called Serve.

According to the company, users can pay other people online or via their cell phones, and use the service to make purchases at retailers that accept American Express via a reloadable prepaid debit card that's linked to the consumer's online Serve account. Serve has mobile apps for both Android and Apple smartphones and can be accessed via Facebook in addition to the Serve.com website.AmEx says customers won't have to pay a fee to start a Serve account or to make payments to other people, and there's no monthly maintenance fee. Adding money to a Serve account, though, costs 2.9% of the amount being added, plus 30 cents per transaction. (The company is waiving that fee for the next six months in a promotional move, though.) It remains to be seen if customers will like the convenience enough to not mind paying the fee.

While American Express's Serve is the newest entrant into this field, it's certainly not going to be the last. According to this article, Google is partnering with Citi and MasterCard to create its own mobile payment system. (There's no word yet if this tool would include P2P payment ability yet.)

Mobile payment systems are likely to increase as people use their phones for more banking, business and retail transactions, says Doug Johnson, vice president of risk management policy at the American Bankers Association. According to this article, which cites a market research firm, mobile payments will be a $633 billion annual industry by 2014.

Johnson points out that there have been attempts to launch P2P payment systems in the past. This time, they might gain more traction because both people and technology are getting smarter.

"I think this time it can potentially enjoy greater levels of success because we know more and there's a greater ease of applications," Johnson says. "The ease with which you can get that money transferred and use your phone as a storage device for that money, I think that's what's going to drive adoption."

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