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"FORTUNE &amp;#8212; We are paying for things in new ways; that much is clear. We&amp;#8217;re paying for taxi rides using\u00A0our Uber app,\u00A0checking out personally tailored\u00A0offers on Facebook, and downloading films to our Amazon Kindles &amp;#8212; without ever pulling the plastic out of our wallets. Yet Ken Chenault plans to insure that American Express \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tAXP\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t remains in the center of every transaction.\nAt the Mobile-First Summit in New York, I\u00A0sat down with the chief executive\u00A0to discuss the future of mobile payments. Below is\u00A0a condensed version of our conversation, edited for clarity.\nFortune: What is the scope of the mobile opportunity for American Express?\u00A0\nChenault: Mobile\u00A0is redefining both online and offline commerce. The penetration of m-commerce in e-commerce was around 0.09% [Meaning that less than one percent of e-commerce transactions happened on\u00A0mobile devices &amp;#8211;Ed.]. By 2017, it\u2019s projected to be at 26% and that\u2019s just penetration in e-commerce.\nThat\u2019s just e-commerce. When will we stop breaking it out and talk simply about commerce?\nWhat\u2019s happening is a gigantic opportunity. Mobile will redefine how commerce is done. Steve Jobs redefined the retail experience. I think commerce and mobile will do an even more transformational job in an exponential way. The opportunity for startups to redefine the power of mobile is incredible.\u00A0Scale is important, but if you have the idea, you now have the ability to connect with companies that can drive that scale. Clearly there are five platforms that will play an important role and be very powerful: Amazon \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tAAZN\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t, Apple \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tAAPL\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t, Google \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tGOOG\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t, Facebook \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tFB\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t, and Alibaba. More and more, startups will be able to connect to these services to scale quickly.\nHow does the competitive landscape change?\nI think it\u2019s important to understand the payments industry and commerce is going through fundamental change. You\u00A0are seeing a blurring of commerce, mobile, payments, and a convergence of online and offline. In\u00A0the near term, plastic is not going to go away. You are going to see a demarcation between payment companies. There are going to be those that stay in the status quo, and they\u2019re going to focus on facilitating payments. That is a mistake. They will be reduced to a commodity. There will be those companies who will focus on the entire commerce journey, and that&amp;#8217;s us.\nI\u2019ll give you one example of how payments has changed: Uber has changed payments. Infrastructure hasn\u2019t changed at all, but the experience is frictionless and seamless, and you don\u2019t even know you&amp;#8217;re consummating a payment.\nWe have the largest integrated global payments platform. We bring together users, card members, and merchants, and the data is incredibly valuable. We know where they spend online and offline. We want to deliver benefits and services when our card members want it, where, and how\u00A0they want it.\nLet\u2019s talk about Uber. I use it, and just noticed this morning that when I pulled up Google Maps to get directions to this venue, the\u00A0app offered me the option to call Uber. As a consumer, I was dealing with the Google brand\u00A0and\u00A0the Uber brand. Yes, I made the payment on my American Express card, which is linked to my Uber account, but the AmEx brand\u00A0didn\u2019t come into my line of sight. Is that a good or a bad thing for AmEx?\nFor us\u00A0it\u2019s a good thing because at the end of the day we have a well-known and trusted brand &amp;#8230; here\u2019s not much of a difference between saying I want to be the first card in the wallet and saying I want to have AmEx as my default option. What\u00A0is\u00A0critical is\u00A0the benefits, services, and innovation we provide so we\u2019re the first card in the wallet.\nSo you\u2019re talking about the difference between the transaction and what you call &amp;#8220;the journey.&amp;#8221; What\u2019s involved in that journey?\nHere\u2019s what\u2019s key. If we look at how mobile devices are used, people who use mobile devices in the shoppers\u2019 journey are 40% more likely to convert to sales. Think about how people use information, how they leverage recommendations they get from social media sites. The key is to understand the different elements of the commerce journey. We want to be where our customers are. We want to deliver them benefits in the\u00A0way they want to have those benefits presented to them. It goes back to a key message I give in my organization: This is an environment where you innovate or die. We want to be the company that will put us out of business.\nPart of that is looking beyond the trends to understand systematic change. Were digital wallets a fad?\u00A0In 2011, companies like Google and Square launched them. In 2014, many of those efforts haven&amp;#8217;t worked and are being retried. Are digital wallets dead?\nI don\u2019t think they\u2019re dead, but if you go back to what I said publicly in 2011, I didn\u2019t think these wallets met a value proposition. I\u2019m going to tap to pay? What\u2019s the friction that it\u2019s really solving? What are the benefits that I\u2019m getting? How is that helping me in my shopping journey? At the end of the day, the failure of wallets was not being focused enough on customer needs.\nBut you think some efforts have worked?\nWe\u00A0acquired a platform called Revolution Money in 2009 at the height of the financial crisis. It is a very flexible alternative payments platform. We said, There\u2019s a large population of folks not being served &amp;#8212; there are 70 million people in this country who don\u2019t have a checking account or don\u2019t believe they\u2019re being served well. NerdWallet has said with prepaid cards, you\u2019re paying $300 a year to use your\u00A0own money. With checking accounts, people are paying several hundred dollars a year if they don\u2019t have a minimum balance. So we came out with an online payment platform that works offline and online. In early 2014,\u00A0once we got the platform stabilized, we brought on 2.4 million customers. In the month of April alone, we brought on 1\u00A0million customers. They\u2019re transacting volumes on our platform. Wallets, if they are done right, can work. Mobile apps will play an important role going forward.\nWe made further changes to the functionality of the platform so you can do anything you want &amp;#8212; pay bills, do peer-to-peer-payments, write checks. The term we coined in our company is that it is expensive to be poor. But we\u00A0can develop a model where we have attractive economics, so instead of paying $14.95 a month for a prepaid card, you pay $1 a month with us for a far better service.\nPeer-to-peer payments: How important is the capability?\nIt\u2019s very important, but what\u2019s critical is that you have got to connect peer-to-peer payments with a range of services that meet a variety of needs. As a standalone, it&amp;#8217;s\u00A0difficult to generate the economics you need. But there\u2019s a very high demand. We looked at where spending takes place. Outside of credit cards and charge cards, there\u2019s $25 trillion out there. That\u2019s a tremendous opportunity.\nYou&amp;#8217;ve done creative things with the AmEx loyalty program like recently making it possible for people to pay for a New York City cab ride with points. Are people actually using this service?\nYes! It is frictionless, and once people\u00A0use it, 80% of the them\u00A0return.\n(Audience member:\u00A0&amp;#8220;I\u2019m worried it\u2019s a bad deal, that the points can be used better elsewhere.&amp;#8221;)\nHere\u2019s what you\u2019re missing. Do you want to only use those points for airlines? People have said, &amp;#8220;I want choice and convenience.&amp;#8221; If you just say for every dollar there\u2019s one point, people want a wide variety of choices."^^<http://www.w3.org/2001/XMLSchema#string>
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