American Express is investing in mobile payment technology with start-up Payfone that relies on a person's mobile phone number to authorize payments to a merchant based on funds from a user's credit card or debit account.
The Payfone payment system doesn't rely on contactless wireless Near Field Communication (NFC) technology, although Payfone uses an open approach and eventually could use NFC, Payfone CEO Rodger Desai said via email. "Payfone's system is architected to be open and able to embrace all payment and billing standards, such as NFC," Desai said.
NFC is gaining attention as a way to provide mobile payments, allowing a user with a smartphone equipped with an NFC chip to wave the phone near an NFC reader at a store to make a payment. The payment could be charged to the customer's bank account or wireless carrier. Several models are emerging in the U.S. from various credit card companies, phone manufacturers and wireless carriers.
Payfone said AmEx is the largest investor in a new $19 million funding round for the company that was co-founded by Desai in 2008. Amex didn't provide details on how it expects to use the Payfone technology except to say in a statement that Payfone will be used to "evolve" AmEx's new digital payment system called Serve, which allows a user to bill purchases to nearly any bank-issued credit card or prepaid card. AmEx expects Serve to attract younger users who want to make payments on their phones and other digital devices rather than by swiping a credit or debit card.
Payfone, in a statement, said Verizon Communications and Research in Motion, through their investor arms, are also investing in the company.
An online consumer can currently use Payfone's payment checkout system based on the consumer's mobile phone number, Desai explained. Payfone relies on an existing carrier signaling network known as SS7 to transmit payment data securely, Desai added.
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