A cell phone functioning as a credit card is a well known concept in South Korea and Japan. Now, it appears that the idea is about to change the way that U.S. consumers buy products.
Start up Payfone has teamed with American Express to deliver a new mobile payment option to consumers. The Payfone mobile authorization and payment services works with the American Express digital payments platform, Serve, so consumers can use their phones to pay bills upon checkout. To help lower the risk of identity theft, the Payfone system ties the phone's SIM card, device ID and location to each account.
The concept of using phones to pay bills has great potential Payfone noted that more than 5 billion people worldwide have mobile phones, but less than 2 billion have credit cards. American Express seems quite interested in the emerging payment option. The company was the largest investor in the latest $19 million round of funding pumped into Payfone. Other contributors included BlackBerry Partners Fund, Opus Capital, Rogers Communications, RRE, and Ventures Verizon Investments Inc.
To date, customer interest in mobile payments has been tepid in the US. Many of the established credit card companies have been staying on the sidelines and waiting for the technology to mature. With the American Express endorsement, that scenario may be changing. While small and medium businesses will not have to immediately address this emerging area, they should at least start thinking about how it will affect their business and determine how they may integrate this new payment option into their operations.
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