American Express Expected to Announce Funding for Mobile Payment Start-Up

According to sources in the know, American Express could announce – as early as this morning – that it is investing in a new mobile phone payment start-up dubbed Payfone.

AmEx is expected to announce on Wednesday that it is the lead investor in a $19 million financing for Payfone Inc., a New York start-up that also is backed by the venture-capital arms of Verizon Communications Inc. and Research In Motion Ltd.

“The phone number is the most ubiquitous identification in the world. Using that as a way to check out means it can be used on a global basis,” Rodger Desai, co-founder and chief executive of Payfone, tells the Wall Street Journal.

The deal would reflect the latest effort by the credit card giant to gear up for the anticipated forthcoming dawn of the mobile payments era.

It is widely believed that Payfone will use an AmEx-based payment platform to provide customers with a digital account that is tethered to a credit card or a prepaid card. Customers then have the ability to link this payment account to a dedicated mobile phone number, which will thereby enable mobile payments in a secure manner.

American Express, however, isn’t alone in the race for credit card juggernauts to embrace the mobile payments revolution. MasterCard, for example, is partnering with Google Inc. and Citigroup Inc. to embed technology in Android mobile devices to make mobile payments possible.

Similarly, Discover is among those teaming with Isis to help enable customers to pay for goods with their smartphones.