Financial services giant American Express and mobile payment processor Payfone are partnering to launch a new mobile checkout service with worldwide reach.

As part of the alliance, Payfone will combine its advanced mobile authorization and payment services with American Express’ recently launched digital payments platform, Serve. AmEx’s Serve and Payfone are teaming up to let consumers make purchases from online merchants using their mobile phone number at checkout.

“AmEx is approaching our push into digital commerce and payments in a very different way,” said Dan Schulman, group president of enterprise growth at American Express, New York. “We realize we can’t do it alone and we can’t build everything ourselves.

“We are looking to partner, invest and, in some cases, acquire talent within the ecosystem,” he said. “Our relationship with Payfone helps us to further enhance our Serve platform and will rapidly increase our speed to market into international.”

American Express recently launched Serve, a payments platform designed to deliver emerging payments and services.

Payfone authorizes and processes mobile payment transactions for application stores and merchants by leveraging carrier networks.

Mobile Serve
Consumers using the platform powered by Serve and Payfone will be able to link their mobile numbers to a variety of payment methods, including their prepaid or postpaid wireless carrier account or their Serve account.

Payfone takes advantage of the existing assets of carriers such as the global SS7 signaling network for directly connected payment authorization and processing.

“American Express is partnering with Payfone because they are well positioned to lead the way in mobile commerce – particularly given they are leveraging an existing infrastructure to provide seamless and secure payments and authorization,” Mr. Schulman said.

“By integrating Serve—our flexible and funding-agnostic platform—with Payfone’s capabilities, we believe we can reach new demographics, particularly in emerging markets, and bring new types of merchants and transactions onto our network,” he said.

Payfone claims its IP is geared toward driving merchants’ sales conversion and revenue yield while managing fraud using new factors of authentication that are inherent in the carrier networks.

For consumers, AmEx and Payfone want to offer greater choice in payment methods and a frictionless user experience across any device.

Mr. Schulman said that American Express plans to continue to rapidly enhance its mobile offerings over the coming months and years.

“As we push deeper into digital commerce, you’ll see us operating more and more like a software-based company,” Mr. Schulman said. “Just like we are doing with the evolution of Serve, we will push out versions of our products and services, then we’ll listen and learn from consumers and small businesses and merchants and partners, and we will iterate.

“Then we’ll do it all again, and again,” he said. “The digital payments space will continue to evolve, but ultimately it is not about the form factor change – or the switch from plastic to mobile – it is about the value proposition to consumers and merchants.

“We will continue to lead the way at helping buyers and sellers to come together.”

The partners are hoping that the combination of Payfone and AmEx assets will drive mobile payments adoption both here and overseas.

“Together we will deliver more choice to consumers, mobile operators and merchants worldwide,” said Roger Desai, cofounder/CEO of Payfone, New York. “This service also opens up significant revenue opportunities for carriers, by enabling the operator, for the first time, to play a more significant role in the transaction flow.”

Customers can use their mobile phone number for payments and then link their mobile account to their mobile phone bill or Serve account.

Serve, the digital payments platform from American Express, can be funded from many different ways – from a bank account, debit, credit or charge card, or by receiving money from a friend via P2P payments.

“By teaming up with American Express, Payfone will have the ability to deliver multiple forms of credit, debit and billing capabilities, allowing mobile operators to expand the range of purchases done via mobile phone number,” Mr. Desai said.

“This is huge, as it allows Payfone to bring the industry’s most comprehensive e-wallet to merchants to drive sales conversion and revenue yield,” he said.

“In addition, by directly integrating with American Express’ Serve platform and incorporating key customer care functionality, Payfone will become the first and only mobile payments company backed by a bank grade entity on a global basis.”

Payfone gets $19 million from American Express, Verizon Investments and Rogers Ventures
Payfone has closed its $19 million funding round. American Express is the largest strategic investor in this round of funding, with additional investment from Verizon Investments Inc. (assisted by Verizon Ventures), Rogers Ventures and from existing investors Opus Capital, BlackBerry Partners Fund and RRE Ventures.

American Express and  Payfone are betting that mobile payments will form a major cornerstone in carrier and merchant digital payment strategies going forward.

“Payfone’s new funds will be used to continue innovations in our market approach and to support its global expansion across North America, EMEA, Latin America and Asia,” Mr. Desai said. “The mobile payment industry has seen considerable growth over the last year, with global mobile payments forecasted by Yankee Group to increase from $162 billion in 2011 to $984 billion in 2014, and the U.S. mobile payments market forecasted by Aite Group to reach $612 billion by 2015.

“It’s difficult to give a definitive answer to what next year will bring, as this industry is always evolving and is in a constant state of flux,” he said. “One thing’s for sure – we’re in for an exciting ride!”

Final Take
Dan Butcher, associate editor, Mobile Commerce Daily