Is it futile to compete with PayPal? That's not easy to answer, but it will be interesting to watch a traditional payment company, American Express, try to make in-roads against an acknowledged online giant. Bill Gates used to talk about how hard it was for companies to maintain dominance as paradigms shift. IBM gave way to Microsoft, which gave way to Google. In payments, the likes of Visa and MasterCard would like to maintain their dominance as a new era of payments opens up.

With the launch of its new Serve offering, American Express enters the fray.

The new service, built from its purchase of Revolution Money, in a sense aims to be a better PayPal with strong online-offline synergies. People who set up Serve accounts via the Internet or a phone can use that account to make payments, send and receive money, and make purchases--just like PayPal.

Serve will charge two fees. The first is a 2.9 percent transaction plus 30 cents per deposit. The fee is reduced to zero for cash, debit and ACH. It will also charge a $2 fee for ATM withdrawals, but the first withdrawal every month is free. Fees will be waived for six months. Serve says it will not charge account-opening fees, monthly fees, or P2P fees and sub-accounts (up to four accounts).

The service will also issue a prepaid card to all Serve customers that can be used anywhere American Express is accepted.

So does Serve have a chance against the many competitors in the mobile payments arena--especially as NFC looms as a reality? (Serve is NFC friendly, the company notes.) It may get a boost from its parent's marketing heft. But the road to the top will be tough. It will be important for the service to make a huge splash out of the box.

We'll see how effectively this is cross-sold. It may seem odd using the premium American Express brand to cross-sell a product designed to be much less exclusive.

For more:
- here's article from The Atlantic

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