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Analysis: Verizon and Amex Serve Take on Google Wallet

American Express's Serve mobile payment technology hits Verizon phones this fall, taking on rival Google Wallet.

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As the race to offer mobile payments continues to heat up, Verizon Wireless and American Express have joined forces to offer mobile payments via the carrier's wireless network. According to a joint statement from Verizon and Amex, the Verizon will begin integrating American Express's Serve payment system over the coming months.

The Serve payment system will allow users to make payments at retail counters and online, as well as send and receive funds between other users of the service via email, in a manner similar to PayPal. On a mobile device, Serve authenticates an account via the device's mobile phone number, then presents the user with an onscreen menu to make a purchase. The system will be accepted at retailers that accept American Express payments.

The Serve payment system draws funds from external bank and credit card accounts. Users decide which of their accounts to use to fund their serve payments, and the service processes purchases accordingly. Payments linked to debit and credit card accounts will process instantaneously, while bank account transactions will take three to five days to process, according to information on the Serve website. Customers may also have the ability to bill some purchases directly to their Verizon Wireless account.

While Serve bears a number of similarities to the prominent Google Wallet partnership between Google, MasterCard, and Sprint, it will differ in some significant ways. Most notably, Serve will likely appear on a wide variety of Verizon Wireless devices at launch. This is a notable difference from Google Wallet, which will debut only on the Sprint-based Nexus S 4G phone, and will likely take several months to appear on other devices. Because Google Wallet is built around near-field communication (NFC) technology integrated into the phone itself, it is very unlikely to appear on a significant number of devices during its early stages. Serve's network-based authentication system will be provisioned by Payfone.

The rise of mobile payment systems adds considerable weight to worries over mobile device security, particularly in the wake of a new mobile threat report from Lookout that claims three out of 10 Android users will fall prey to malware this year. Understandably, mobile payment providers are taking measures to provide strong security for their users, and Serve appears to be no exception. Like Google Wallet, Serve integrates encryption, user PINs, and user multiple layers of user authentication for every purchase.

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