What are incumbents such as American Express or Chase doing around the upcoming revolution on mobile payments, commerce and banking? New players – such as Google, Isis, BankSimple and BankNMove – are grabbing the headlines but that doesn’t mean that the established players are sitting still. They are also moving, albeit at a slower pace.
To have the full picture of where this sector is going, it is worthwhile reviewing the mobile strategy of some major players in the credit card and banking space. With this purpose, we will publish a number of blogs covering the main activities and plans of the largest and best-known names in this industry.
American Express
The first two blogs on this topic will focus on American Express, a late-comer to the game that now seems to be moving faster than its competitors. Today we will discuss their ‘Acquisitions and Investments’ with the next post focusing on their ‘Partnerships’
Acquisitions and Investments:
1) Revolution Money – American Express bought Revolution Money located in St. Petersburg for $300 million in early 2010. This acquisition was the foundation of AmEx Serve, a digital payment and commerce platform. Essentially, it is an electronic wallet that can be used both online and in bricks-and-mortar stores that accept AmEx.
The idea is that once you sign up for a Serve account, you can link it to any bank account, debit or credit card to fund it. You can then add money, send and receive money to and from anybody that has an e-mail address (and that has signed up with Serve) and manage sub-accounts – for example, your kid’s account that you can easily fund and control.
You can also pay offline – or online – with an American Express Serve pre-paid, reloadable card that is accepted anywhere AmEx is accepted – including ATMs. This is an extremely friendly pre-paid card for the consumer with many free services, such as: Person-to-person money transfers, transfers to and from sub-accounts, purchasing online and in stores and funding your account from a bank account or debit card.
Why would American Express launch a pre-paid service? According to Dan Schulman, AmEx Group President, Enterprise Growth: ‘This card will allow us to focus on serving new demographics’. And this is indeed true: A new customer segment can be added to the mix with little to no added risk. And the trend seems to be growing fast since the amount loaded on prepaid cards will reach $118.5 billion in 2012, up from $1.8 billion in 2006.
But is there any other reason for this new focus? And why precisely now? Given that pre-paid cards are outside the remit of new regulations around fee limits on debit cards, this business could be extremely profitable for the banks since merchants could be paying much higher transaction fees.
As it stands now, the AmEx prepaid card, which drives much of its demand, is a great deal for the consumer and for AmEx, although maybe not so much for the merchant.
2) Payfone Inc – Two weeks after launching Serve, AmEx participated in Payfone’s third round of funding, which raised $19 million from AmEx, Verizon Investments, Roger Communications, Opus Capital, BlackBerry Partners fund and RRE Ventures. As part of the investment, AmEx will integrate Payfone’s mobile payments service into Serve.
Payfone allows you to send charges directly to your cell phone bill by introducing your phone number. No text messages and no pins involved. It is meant to be a very convenient and safer way to do mobile payments.
By checking with the carrier upfront, Payfone is supposed to be able to determine if a consumer has the funds or the credit worthiness to make a purchase, therefore dramatically reducing fraud and identity theft.
3) Sometrics – Just last month, in September, AmEx acquired Sometrics, a virtual currency monetization platform, for $30 million. Virtual Currency has become very big on video games, where users will use their credits to pay for anything from cloths to access to the next game level. American Express will continue the operation of Sometrics’ current business and will work with Sometrics will allow Serve customers to purchase virtual currencies via the platform. Over time, AmEx plans to integrate Serve into the payment path of the games that Sometrics supports.
Sometrics’ in-game payments platform basically powers virtual currency transactions and payments for game publishers while serving location and demographic targeted offers. The company currently supports dozens of payment options (including mobile carrier infrastructure and credit card support) and hundreds of brand engagement ads, reaching a total global audience of more than 225 million consumers in more than 200 countries.
These are AmEx's main acquisitions around mobile commerce and mobile banking. As mentioned above, next week we will discuss AmEx's partnerships and how they are leveraging these acquisitions to better serve customers.
To have the full picture of where this sector is going, it is worthwhile reviewing the mobile strategy of some major players in the credit card and banking space. With this purpose, we will publish a number of blogs covering the main activities and plans of the largest and best-known names in this industry.
American Express
The first two blogs on this topic will focus on American Express, a late-comer to the game that now seems to be moving faster than its competitors. Today we will discuss their ‘Acquisitions and Investments’ with the next post focusing on their ‘Partnerships’
Acquisitions and Investments:
1) Revolution Money – American Express bought Revolution Money located in St. Petersburg for $300 million in early 2010. This acquisition was the foundation of AmEx Serve, a digital payment and commerce platform. Essentially, it is an electronic wallet that can be used both online and in bricks-and-mortar stores that accept AmEx.
The idea is that once you sign up for a Serve account, you can link it to any bank account, debit or credit card to fund it. You can then add money, send and receive money to and from anybody that has an e-mail address (and that has signed up with Serve) and manage sub-accounts – for example, your kid’s account that you can easily fund and control.
You can also pay offline – or online – with an American Express Serve pre-paid, reloadable card that is accepted anywhere AmEx is accepted – including ATMs. This is an extremely friendly pre-paid card for the consumer with many free services, such as: Person-to-person money transfers, transfers to and from sub-accounts, purchasing online and in stores and funding your account from a bank account or debit card.
Why would American Express launch a pre-paid service? According to Dan Schulman, AmEx Group President, Enterprise Growth: ‘This card will allow us to focus on serving new demographics’. And this is indeed true: A new customer segment can be added to the mix with little to no added risk. And the trend seems to be growing fast since the amount loaded on prepaid cards will reach $118.5 billion in 2012, up from $1.8 billion in 2006.
But is there any other reason for this new focus? And why precisely now? Given that pre-paid cards are outside the remit of new regulations around fee limits on debit cards, this business could be extremely profitable for the banks since merchants could be paying much higher transaction fees.
As it stands now, the AmEx prepaid card, which drives much of its demand, is a great deal for the consumer and for AmEx, although maybe not so much for the merchant.
2) Payfone Inc – Two weeks after launching Serve, AmEx participated in Payfone’s third round of funding, which raised $19 million from AmEx, Verizon Investments, Roger Communications, Opus Capital, BlackBerry Partners fund and RRE Ventures. As part of the investment, AmEx will integrate Payfone’s mobile payments service into Serve.
Payfone allows you to send charges directly to your cell phone bill by introducing your phone number. No text messages and no pins involved. It is meant to be a very convenient and safer way to do mobile payments.
By checking with the carrier upfront, Payfone is supposed to be able to determine if a consumer has the funds or the credit worthiness to make a purchase, therefore dramatically reducing fraud and identity theft.
3) Sometrics – Just last month, in September, AmEx acquired Sometrics, a virtual currency monetization platform, for $30 million. Virtual Currency has become very big on video games, where users will use their credits to pay for anything from cloths to access to the next game level. American Express will continue the operation of Sometrics’ current business and will work with Sometrics will allow Serve customers to purchase virtual currencies via the platform. Over time, AmEx plans to integrate Serve into the payment path of the games that Sometrics supports.
Sometrics’ in-game payments platform basically powers virtual currency transactions and payments for game publishers while serving location and demographic targeted offers. The company currently supports dozens of payment options (including mobile carrier infrastructure and credit card support) and hundreds of brand engagement ads, reaching a total global audience of more than 225 million consumers in more than 200 countries.
These are AmEx's main acquisitions around mobile commerce and mobile banking. As mentioned above, next week we will discuss AmEx's partnerships and how they are leveraging these acquisitions to better serve customers.
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