Amex tackles PayPal with e-wallet system

American Express has introduced a payment system for smartphones and computers that competes with PayPal. Photo / Supplied

American Express has introduced a payment system for smartphones and computers that competes with PayPal.

Serve, as it's called, is a prepaid "electronic wallet" that can be funded by linking with a cheque account, debit card or credit card, says Dan Schulman, group president of enterprise growth at New York-based Amex.

Serve customers can shop online without being required to enter payment credentials, such as a credit-card number and mailing address, each time.

They also will be able to send money person-to-person in the United States by entering a personal identification number and recipient's email address. That feature will be available worldwide later this year.

Amex lacks a branch network and does not issue debit cards linked to cheque accounts, the world's fastest-growing payment method. That has put it at a competitive disadvantage with lenders including Bank of America and JPMorgan Chase, the two biggest US banks measured by assets.

"This is really the first time that American Express is going to be able to address those consumers that typically would utilise either a debit card or cheque account," Schulman said last week.

"There's a cultural shift happening at American Express in terms of us really becoming more of a software and platform-based company."

Amex, the world's third-biggest payments network, is looking to take market share from PayPal and larger rivals Visa and MasterCard.

PayPal is "perfectly positioned" to provide customers with an e-wallet, according to spokesman Anuj Nayar. "Commerce is going to change more in the next two years than it has in the last 10, and PayPal looks forward to leading the way."

Last year, Amex spent US$305 million ($402 million) to buy internet-based payment processor Revolution Money from the investment firm run by Steve Case, the co-founder of America Online. Revolution Money became the technological foundation for Serve, said Schulman.

Consumers can open accounts at www.serve.com and download an application to their Apple iPhones and iPads, or smartphones using the Android operating system.

Schulman said users of Research In Motion's BlackBerry would have access later this year. There is no initial cost for opening an account, a minimum balance is not required and deposited funds do not expire.

Fees for funding accounts with credit cards are waived for the first six months. After that, Amex will charge 2.9 per cent of the transaction total plus 30c, which is competitive with PayPal's pricing, according to Joanna Lambert, an Amex spokeswoman.

There is no charge for using debit cards or cheque accounts to fund a Serve account.

Amex also is partnering with firms to offer coupons that can be clicked on a website, loaded into a Serve account and applied when a consumer shops online or in a store.

Account holders will receive plastic cards linked to their e-wallets, with the Serve logo on the front and a blue box on the back to signal to merchants and consumers that it may be used at any of the millions of locations accepting Amex. Bloomberg