American Express joined the list of companies offering person-to-person payments by launching its digital payments program, called Serve on Monday.
Serve is the latest entry into the growing number of services available that allow individuals to send money to each other instead of using cash. These services are being touted as a way to make it easy to pay the lawn guy, make good on that $20 owed to a friend or split a restaurant check.
HOW IT WORKS: Consumers may use smartphones, the Serve.com website and Facebook.com to access the service.
Users must first open a Serve account, which takes just a few clicks. The accounts are linked to a reloadable, prepaid Serve card.
Customers can make deposits into their Serve account by using any bank account, debit card or credit card — even a MasterCard, Visa or Discover Card. Money transfers from banks may take up to five days to be applied to the Serve account, while funds from credit cards are added "promptly," the site says. Both bank accounts and cards can be used as a back-up to automatically transfer money to the Serve account if it runs low.
The prepaid card may be used like any other card at ATMs worldwide, and for purchases in stores or online where American Express is accepted in the U.S.
SEND & RECEIVE: Once money is added to a Serve account, it may be sent to an individual using just an email address. That person will have to open a Serve account to receive the money.
The idea behind the service is to make it possible to digitally transfer money that is now exchanged by cash or check, or through competitors like PayPal Inc.
Users can also create sub-accounts, and control and track where the funds are used. That feature might appeal to parents, for instance, who use the accounts to pay their child an allowance and have some ability to control how it's spent.
NO FEES FOR 6 MONTHS: There are no fees for opening a Serve account, no monthly fees and no fees for sending cash to another individual.
Amex is also waiving fees to put money into Serve accounts for the first six months. After that, adding money will cost 2.9 percent of the amount, plus 30 cents per load from a credit card. So it would cost $3.20 to add $100 to a Serve account from a credit card. There will be no fee for adding money from a debit card or bank account.
Customers will be allowed one free ATM cash withdrawal per month. After that, ATM withdrawals will cost $2.
COMPETITION INCREASING: Serve's launch comes less than two weeks after Visa Inc. announced its person-to-person payments system, which allows customers to send money to Visa credit or prepaid accounts from their own cards or bank accounts. Both companies are hoping to get a piece of the growing person-to-person payments business, which is dominated by PayPal.
Research firm The Aite Group estimates individuals in the U.S. exchanged more than $865 billion last year using cash, checks, gift cards, money orders and so on. Less than 10 percent of that total moved electronically, while more than 53 percent — $462.5 billion — was in cash. Analyst Ron Shevlin doesn't think cash will go away any time soon, but he forecasts a 21 percent drop in cash exchanges by 2015 as more users adopt electronic person-to-person services.
MasterCard Inc. is also reportedly teaming up with Google Inc. and Citigroup Inc. to launch a mobile payments application for Google's Android system. Discover Financial Services and Verizon Wireless are also working together on a mobile system. It's not yet clear if those services will include a person-to-person payments element.
Source: Associated Press