Last month, American Express launched a new digital payments platform called Serve. At launch, it was essentially an alternate version of PayPal – but part of the platform’s point is that new services will be added to it as time passes. One of the first has been announced this week, as mobile payments provider Payfone announces that it will be integrating mobile operator payment channels into Serve.
What’s the story?
This announcement is actually buried in the middle of an entirely different one, about the latest round of funding for Payfone. The company has pulled in $19 million from a variety of investors (including Verizon and Rogers), but the largest single investor was American Express – and as part of this investment, they have announced that Payfone will be working closely with American Express on Serve. Dan Schulman, Group President, Enterprise Growth, American Express says “the payments industry is going through a fundamental transformation… we look forward to working with the Payfone leadership team to evolve Serve.”
What does Payfone do?
There are a staggering number of ways that mobile payments can be processed. The way that Payfone goes about it is to use already existing mobile operator functions to make them work. You can see our in-depth look at Payfone here, but the short version is this:
In order to allow mobile roaming to happen, mobile operators had to create a robust and secure system that allowed them to transfer money to one another. Payfone’s strategy is to extend that system to allow merchants to accept payments from customers as well. All you need is your mobile number, and you can make payments both at physical checkouts and in-app.
What will it be doing with Serve?
Serve already allows a lot of different things. You can make payments on-line, you can make payments in-store using a Serve Card, and the same card can be used to make withdrawals from ATMs. The problem here is it means Serve is only useable by people with bank accounts and internet access. With the assistance of Payfone, Serve can create a system that you only need a mobile number to access – so American Express can launch the platform in developing markets like India.
What we think?
It seems that everyone is developing a method to bank the unbanked these days. And even the banks are doing it through mobile. The general theory seems to be that there are vast hordes of people who are just waiting to get their hands on banking services – and building actual banks out there would be prohibitively expensive. And the operators seem to be in real rush to get out there before the banks do. I can’t blame them; since the growth of smartphones is making mobile services more homogenised, and seriously impacting the operator’s abilities to differentiate between each other, the networks are desperate to expand into new services areas.