Digital Transactions Authoritative, insightful and timely information for payments professionals
n
In a sign of just how important young tech companies in mobile payments and electronic commerce have become to established payments players, American Express Co. on Tuesday announced that it will invest $100 million in early-stage companies working in what AmEx calls the “digital-commerce” space.
n
n
AmEx announced no specific companies in which it will invest over a multiyear period, but its shopping list covers all of the hot areas of tech development in payments, “including loyalty and rewards, mobile and online payment management, fee-based services, security and fraud detection, and data analysis,” says an AmEx release.
n
n
The initiative will be overseen from AmEx’s new office in California’s Silicon Valley and headed by Harshul Sanghi, whom AmEx recently appointed managing partner for the enterprise growth group. Sanghi previously ran Motorola Mobility Ventures, the investment arm of cell-phone maker Motorola Mobility Inc.
n
n n
“We’re looking to play in the broad commerce space,” Sanghi tells Digital Transactions News, noting that AmEx started as a stagecoach company 162 years ago. “We’ve reinvented ourselves continuously.” He adds that although most of the investments probably will be domestic, AmEx might invest abroad if the right opportunity presents itself.
nn
AmEx is walking down a well-trod path as it shops for investment possibilities. The company most recently made what a spokesperson calls “strategic investments” in mobile-payments provider PayFone and Rearden Commerce, an e-commerce platform provider.
n
n
All of AmEx’s major competitors in conventional payments as well as online payments providers also are on the hunt for attractive startups or slightly more established firms that might be developing the next big thing in mobile payments, electronically delivered rewards, or fraud control. Visa Inc., for instance, this year invested in the hot mobile-payments provider Square Inc. PayPal Inc. and parent company eBay Inc. have made a string of acquisitions to bolster PayPal’s position as the No. 1 provider of alternative payments, especially as the mobile niche prepares for expected mainstream acceptance. Their recent acquisitions include Zong, Magento, FigCard and RedLaser.
n
n
“I would think of it like the 1996 Internet, that’s where we are,” says mobile-payments consultant Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group LLC. “It looks like AmEx wants to place small bets in lots of places.”
n
n
Meanwhile, Intuit Inc., provider of the GoPayment mobile-payments service that competes with Square and independent sales organizations, announced a marketing deal Monday with AT&T Inc., the No. 2 U.S. cell-phone provider. AT&T’s sales force and call centers will make GoPayment available to a majority of AT&T’s small-business customers through pre-approvals and automatic signup.
n
n
The partnership is similar to one Intuit announced in August with Verizon Wireless, the U.S. market leader in mobile accounts, and reinforces Intuit’s strategy of pairing up with companies with broad connections to small businesses as markets for its payment services and core software products, including the QuickBooks accounting program. AT&T has about 3 million small-business customers while Intuit has about 8 million.
n
n
GoPayment has a software application for smart phones and an attachable card reader. The basic service charges a 2.7% discount rate for swiped transactions while higher-volume small businesses can get the service for $12.95 a month and a 1.7% discount rate on card-present transactions. Monthly fees will show up on the subscriber’s AT&T bill.
n
n
“We look at Intuit as one of the leaders in small business,” Ebrahim Keshavarz, AT&T vice president of small business product management, tells Digital Transactions News. “Intuit is a brand that understands small business.”
