Recently, American Express Company (AXP - Free Report) inked a deal with Isis, a mobile payment provider to enhance its payment service operations. Pursuant to the agreement, American Express will integrate its American Express Serve – a payment application, with the Isis Mobile Wallet service. This integrated app will be rolled out nationally in the second half of 2013.
The Isis Mobile Wallet services uses near field communications (NFC) technology to help consumers make payments, redeem coupons and present loyalty cards through their mobile phones. On the other hand American Express Serve works as an alternative to debit and other prepaid cards.
The co-branded app will facilitate consumers to tap and pay with their phone at NFC enabled retail locations that accept American Express. It allows customers to pay bills online as well as engage in money transfers conveniently and at an affordable price. Additionally, consumers can use their existing bank accounts, credit or debit cards to load cash directly to their American Express Serve account or fund. Even consumers without access to traditional bank accounts or credit can deposit cash directly in this account.
As per Federal Deposit Insurance Corporation (FDIC), about 70 million Americans lack bank accounts or don’t have access to credit. As a result they pay in cash and are dependent on expensive services for bill payment or money transfers. Thus there exists a huge demand for an inexpensive yet convenient mode of payment in the American payment market. Through its alliance with Isis, American Express intends to tap this opportunity. It intends to make its American Express Serve, which is an alternative to traditional banking services, available to millions of consumers, thereby gaining market share.
American Express currently carries a Zacks Rank #3 (Hold). Other payment service providers like FleetCor Technologies Inc. (FLT - Free Report) carry a favorable Zacks Rank #1 (Strong Buy) whereas Global Cash Access Holdings Inc. and SS&C Technologies Holdings Inc. (SSNC - Free Report) both carry a Zacks Rank #2 (Buy).