Like three Eskimos trying to share one Snuggie, financial companies are vying for a larger share of your wallet. The credit card giant American Express recently launched a digital payment system called Serve. The service is similar to PayPal, aimed at capturing more of the online transaction market.
Let’s take a look at this new service to see if it is worth your money.
What is Serve?
Serve is an online debit account, similar to PayPal, which lets you send or receive money to anyone who has a Serve account. You can use Serve via their website, or iPhone or Android apps. The big innovation is that Serve also gives you a prepaid debit card that can be used anywhere American Express cards are accepted.
Making Online Payments
When you go to buy that blanket with sleeves, as long as the merchant accepts Serve, you just enter your Serve account information. They charge the recipient a transaction fee of 2.9% plus $.30 per transaction, the same as PayPal.
Once you sign up for an account, Serve will mail you a card, which functions like a debit card: the money you add to your account is what is available for you to spend. The nice thing is, you can pay for your purchases wherever American Express is accepted.
Serve vs. PayPal
Both Serve and PayPal allow you to add money from a checking account or debit card (no fee). However, Serve also allows you to fund the account using a credit card, but charges a fee of 2.9% plus $0.30.
As noted above, both companies charge the recipient a transaction fee of 2.9% plus $0.30, but PayPal tiers down their fees when you are sending amounts over $3,000. Also, PayPal’s $1 ATM fee is half that of Serve’s $2. Serve, on the other hand, is waiving their sending and ATM fee for the next six months. PayPal is your only option if you are traveling or buying something abroad.
One of the differentiating features of Serve is the ability to set up subaccounts for others. This feature is useful for paying things like allowances to your kids, or the babysitter.
Signing up for the account is quick and painless. You will need your basic information (name, address, email, Social Security number). You will also need your funding account information. For example, if you are linking to your debit card, you will need that card’s number, expiration date, etc. After a quick confirmation email and verifying deposits, your account is ready for use.
More Competition is Always Better
Serve represents an important development in the financial services industry for consumers. Not only is American Express attempting to break into PayPal’s market share, but it is also taking a shot at the traditional territory of banks. Whomever the winner might be, one thing is always certain: Increased competition always benefits the consumer.