American Express enters digital payments race

PayPal, Visa and Mastercard beware: American Express has stepped into the digital payments arena in a big way with the launch this week with its new digital payment system called “Serve.” That’s the brand name American Express gave to the alternative payment provider Revolution Money, acquired in 2009.  The service will be targeting consumers (not just Amex cardholders) who currently rely on cash, check and debit cards.

This new Amex payment platform offers digital payment methods including person-to-person, online, mobile (iOS and Android) and reloadable card options, all linked to a single account, with funding from bank accounts, or debit and credit cards.

According to Payments Source, Serve is not a digital wallet exclusively for American Express Card holders; rather, Serve is designed for the masses, and any card brand or bank account can be used to fund Serve transactions. Serve reloadable cards also can be used at merchants accepting Amex cards. Consumers can use their smartphones, the Serve.com website and even Facebook.com to access the service.

As reviewed in Engadget, the strategy behind this new service is to make it easy to transfer money digitally that is now exchanged by cash or check, or through competitors like PayPal Inc. For example, once funds are added to a Serve account, money may be sent to an individual using just an email address; the recipient will need to open a Serve account to receive the money.

Serve’s launch comes on the heels of Visa’s Inc. person-to-person payments system announcement, which will let customers send money to Visa credit or prepaid accounts from their own cards or bank accounts. Other reports suggest strategic partnerships are being forged between MasterCard, Google and Citigroup, as well as Discover and Verizon.

As covered by Engadget, The Aite Group estimates people in the U.S. exchanged more than $865 billion last year using cash, checks, gift cards and money orders. Less than 10 percent of that total moved electronically, while more than 53 percent was in cash. Fast-forward to 2015, and forecasts suggest a 21 percent drop in cash exchanges as more people adopt electronic person-to-person services.

When you look at those market forces and numbers, it’s no wonder competition for digital payments is heating up so fast on so many fronts with so many big players.

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