On Monday, American Express Co. (AXP) (AmEx) expanded its digital payment services by introducing a new smart service known as Serve, by which customers can transfer funds online and also through their mobile phones. The service will be available to the company’s consumers in the US, while an international launch is projected in 2012.
Serve is the outcome of AmEx’s technology generated from its $300 million acquisition of Revolution Money last year. The latter is also an arch rival of Ebay Inc. (EBAY) PayPal person-to-person (P2P) e-payment services.
Serve accounts facilitate online payments through mobile phones and at the merchants who accept AmEx’s cards. The accounts are user-friendly and can be funded from a bank account, debit, credit or charge card, or by receiving money from another Serve account. These accounts can be accessed by Apple’s iOS operating system and Android applications, at Serve.com and also through Facebook, on the mobile phones.
As an introductory offer, AmEx has chosen to waive the fee for putting money into a Serve account using a credit card, for the first six months. Henceforth, a fee of 2.9% of the transaction amount and 30 cents per load will be charged. However, no fee will be charged for adding cash to an account or for debit and direct deposits and other automated-clearing-house transactions.
Meanwhile, the first ATM cash withdrawal each month is free and will cost $2 thereafter. Besides, consumers will not have to pay any fee for making purchases at brick-and-mortar stores using Serve.
Additionally, Serve operates with any US bank, debit or credit account, including cards from AmEx and its peers such as Visa Inc. (V), MasterCard Inc. (MA) and Discover Financial Services (DFS). This would also help the company enhance its competitive and operating leverage in the long run.
Moreover, currently the P2P payment platform through mobile is growing rapidly, given the flexibility of time and fund transfers. According to Generator Research, over 490 million customers are anticipated to use mobile payments by 2014 resulting in a $633 billion market growth, annually.
Dividend Update
On March 28, the board of AmEx also declared a regular quarterly dividend of 18 cents per share, which is payable on May 10, 2011 to shareholders of record as on April 8. The dividend remains unchanged from the previous quarter.
AMER EXPRESS CO (AXP): Free Stock Analysis Report
DISCOVER FIN SV (DFS): Free Stock Analysis Report
EBAY INC (EBAY): Free Stock Analysis Report
MASTERCARD INC (MA): Free Stock Analysis Report
VISA INC-A (V): Free Stock Analysis Report
Zacks Investment Research
