American Express Co. this week signaled its eagerness to tap into new mobile and prepaid payment technologies that will include “debit-like” products, but one analyst says AmEx has far to go before it catches up with competitors’ mobile-payments momentum.
In an Oct. 26 memo, Dan Schulman, who joined AmEx in August as group president of the company’s Enterprise Growth Organization, said AmEx has created an “Online and Mobile” business unit to focus on mobile and emerging payment technologies. AmEx formed Enterprise Growth last year to help develop new business opportunities in a variety of channels.
AmEx has renamed Revolution Money, the online credit card processing company AmEx acquired early this year (see story), Serve Enterprise, and it will fall under the new unit’s management. Serve Enterprise will support the company’s future digital-payment initiatives and all payment forms outside of AmEx’s traditional charge and credit products, Schulman said.
The Online and Mobile unit, staffed so far with former wireless-carrier executives, is charged with building a “very large subscriber base” the company hopes will generate significant revenues within the next three to five years. The company did not identify any specific products or services it has devised yet.
Schulman, who was CEO of Virgin Mobile USA before its acquisition last year by Sprint Nextel Corp., has appointed David Messenger, Virgin Mobile’s former chief operating officer, as head of the new unit. Peter Lurie, previously Virgin Mobile’s general counsel, is senior vice president of strategic partnerships and business development. Jason Alexander, who previously handled portfolio management and planning for Nokia, is vice president of strategic program management.
AmEx also formed a Global Payment Options group charged with developing “payment forms outside of our traditional charge and credit products,” Schulman said. These include prepaid reloadable cards and gift cards, mobile airtime cards, payroll cards, international and domestic person-to-person remittances, virtual currencies, government-backed benefit and insurance claim cards, and “debit-like service propositions.”
Schulman did not provide details of new products the unit hopes to develop.
Additionally, the company has formed an Enterprise Growth Strategy team headed by Chitra Narasimhan, who has served on AmEx’s mergers and acquisitions team since it was founded in 2003, Schulman said.
AmEx also is forming a Digital Council, led by David Messenger, comprised of leaders of business units within the company charged with developing strategic partnerships with “key online players such as Facebook, Amazon, Google, Apple, AOL, Zynga, Twitter and others,” Schulman said.
AmEx’s moves, particularly in hiring former top telco execs, is part of an effort to “play catch-up” with other issuers and networks, contends Red Gillen, a senior analyst with Celent LLC.
“While the mobile-payments industry has not really materialized yet, where it has moved so far is ahead of AmEx,” Gillen tells PaymentsSource. “Most of the top issuers and payment networks have launched noteworthy mobile-payment pilots by this time, and AmEx has not made much noise.”
The Aug. 2 report that several major wireless carriers and two financial-services providers are collaborating to create a system that would enable consumers to make purchases with their phones has heightened competition in the payments industry, Gillen notes. Participants reportedly include AT&T Inc., Verizon Wireless, T-Mobile USA, Discover Financial Services and Barclays PLC, though the purported partners have not acknowledged that such a relationship exists (see story).
Still, other mobile players are feeling the pressure.
“In order to be successful, mobile payments will need some kind of breakthrough element harnessing loyalty or unique marketing and promotions,” Gillen says. “It is still early in the game, and there is still time for AmEx to catch up and make a big play.”