American Express Tries Mobile Payments Without the Smartphoneby
Technology companies mustered great enthusiasm in recent years over paying for things with smartphones, promising it would be easier and more useful than credit cards. The stack of plastic in your wallet shows it hasn’t quite caught on. Now American Express is introducing a new way to pay that it says will be even easier than a smartphone: your credit card.
The company is introducing a program to allow customers to use points from its rewards program to pay for taxi cabs in New York. The program, which uses VeriFone Systems‘ payment devices in the back of taxis, could eventually be expanded to any store with VeriFone’s technology.
The best part, says Leslie Berland, American Express’s vice president for digital technology: “There are no phones necessary, no apps, no codes, no registration. This is an absolute seamless integration that does not disrupt the way you currently pay for a cab.”
It seems the company has gotten a little tired of trying to win people over to the benefits of mobile payments. That doesn’t mean it isn’t still trying. American Express is supporting Isis Wallet, a much-discussed, little-used effort that recently resorted to giving away a million free smoothies from Jamba Juice in an attempt to get people to tap their phones against things to transmit payments. Jamba Juice, for some reason, is shaping up to be quite the payments battlefield: PayPal also tested its mobile-payments system there.
Berland says the technology behind the scenes is rather complicated. American Express has to check how many points you have, convert them to cash value, and deduct them—all while the cabbie keeps the engine running. But by turning its points into a cash-like currency, American Express thinks it can make its rewards program more valuable than Visa‘s or Mastercard’s. This could inspire people to work to accrue more points, allowing American Express to rack up more transaction fees. The experiment could also lay the basis to begin offering special discounts to people who use their points as cash in various places.
But that’s all in the future. The current plan will take place only in New York’s taxis, which have become handy incubators for novel mobile payments. Square has also made a run at getting into cabs, and New York’s taxi industry has been ground zero for car-service apps for some time. Berland says that American Express’s interest in cabs was pretty simple: Cab riders tend to be affluent, and so do American Express cardholders. She argues that taking a cab rather than riding the subway is the kind of minor indulgence that’s perfect for using your points.
Maybe take one to a Jamba Juice in Midtown and use your phone to redeem a free smoothie.