Verizon and American Express to Partner on Serve Mobile Payment System

Verizon and American Express have announced a new partnership whereby the carrier will preinstall the credit and charge card provider’s Serve mobile payment system on its lineup of smartphones and tablets in the near future, adding yet another mobile payment system in the race to become the leader in the nascent and quickly growing market for mobile payments in the US. American Express is also a partner in the competing ISIS NFC based mobile payment network as a supported card for transactions when the service launches next year, which is also supported by Verizon.

The key difference with Serve is that instead of relying on additional hardware such as with Google Wallet or ISIS, Serve merely requires a phone number tied to an active service account to complete the transaction, which is supposed to be safer in theory than having to enter a credit card number directly, though Serve does require merchants to register with the service in order for it to be available to interested customers, with more information for merchants now available. Serve will also be used as a launching point for mobile-based specials and online offers for users, with credits being applied to Serve accounts almost immediately after redeeming such coupons and specials with both Verizon and American Express working with merchants to make such offerings available to users in order to drive adoption.

The infrastructure for Serve will be provided by Payfone, who is backed by both Verizon and American Express for developing the routing infrastructure necessary for the mobile version of Serve to function correctly.  At the continue reading link, statements from key Verizon and American Express executives on the partnership.

Dan Schulman, group president, Enterprise Growth, American Express:

“Our collaboration with Verizon highlights the speed at which Serve is evolving to reach a wide audience, Verizon Wireless customers will soon be able to complement their busy lifestyle with a trusted payment platform that delivers a fast, flexible and secure way to manage their day-to-day mobile purchases, and together we’re taking the necessary steps to make mobile commerce a reality.”

Greg Haller, president, Enterprise & Government for Verizon Wireless, said, “Serve provides a quick and intuitive way for our customers to use their mobile service in a refreshingly convenient way. Our commitment to building the entire mobile payments ecosystem, through our Isis joint venture and now with Serve, gives customers incredible new ways to use their mobile devices.”

Analysis
With Serve, Verizon and American Express are looking to provide an alternative to NFC for those that are apprehensive about tying sensitive information to dedicated hardware, given the frequency of phones that are lost damaged or stolen in the US compared to other countries around the world. While the idea is sound in practice (billing purchases to phone accounts instead of credit cards) the service entirely depends on merchant adoption, a tall order considering the myriad of alternative payment options available, even with the additional assistance that both Verizon and American Express are offering in order to spur uptake. Even if the app is pre-loaded on all of Verizon’s devices going forward, what’s the incentive for someone to use Serve over PayPal or Square? Unless both Verizon and American Express figure out a “killer app” for Serve on mobile, this will just end up being another OboPay.