American Express joins mobile-payment movement

Bob Moon Apr 13, 2011

American Express joins mobile-payment movement

Bob Moon Apr 13, 2011

Tess Vigeland: Why use a cell phone for making phone calls when there’s so much other stuff you can do with them? Surf the web, check email, photos, videos, play games and music. You can also buy coffee! And pretty soon your phone may just replace your wallet.

There’s word today that American Express is investing in a company called Payfone. It’s one of a handful of upstarts promoting the idea that the click of a mouse and the handing over of a plastic card are so yesterday. As our senior business correspondent Bob Moon tells us, cell phones are looking more and more like the way we will do business in the near future.

Bob Moon: That old commercial is sounding more and more like history.

American Express commercial: American Express travelers’ checks. Don’t leave home without them.

It turns out you might soon be able to leave home without checks, credit cards — or even cash. And your cell phone could also be the way you’ll carry coupons, transit passes and plane tickets.

The idea of using a small radio transmitter for those things has been talked about for years. But analyst Nick Holland with the Yankee Group says its time may have finally come — especially now that the major players in both the credit card and cell phone businesses are rushing to get a piece of the action.

Nick Holland: It is a big endorsement. From a consumer perspective, you’ll probably get a lot more trust now that you have, you know, these familiar household names endorsing these products, rather than just being kind of start-ups.

AmEx is casting its lot, along with Verizon and the company that makes the BlackBerry, with a start-up called Payfone. Payfone’s chief, Rodger Desai, says mobile payments can be more secure than using plastic.

Rodger Desai: For example, your phone knows where it is. Your phone has other universal IDs associated with it, and those things are checked on every transaction.

The question is, will consumers now get behind the idea? Bart Narter is a banking industry analyst with Celent.

Bart Narter: Folks who are already “banked” don’t necessarily find mobile payments all that compelling, because they already have credit cards and debit cards and can make payments.

But Payfone’s Rodger Desai says a big part of the world still doesn’t use plastic.

Desai: Estimates show that five billion people now carry a mobile phone, and that’s growing at still a very fast rate, whereas there’s only about two billion people that have a credit card.

Those without include a lot of people in the U.S., such as immigrants and the poor.

Coming next — possibly — a cell phone that can replace your car keys. You can’t leave home without it.

I’m Bob Moon for Marketplace.

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