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American Express pledges $100M for digital-commerce startups

The company will focus on early-stage start-ups looking to address mobile payments, security and other digital services.

American Express's Dan Schulman speaking about mobile payments at a conference last month in San Diego.
Roger Cheng/CNET

American Express plans to dabble in mobile payments and other forms of digital commerce at an arm's length, preferring to throw cash at startups rather than launch its own major initiatives.

The company said today that it will invest $100 million in startups that are designed to address mobile and online payments, security, reward and loyalty programs, and other forms of digital commerce.

This represents American Express's primary stab at the booming digital-commerce business, a potentially lucrative area that has a large number of players all vying for position. American Express's low-key approach stands in contrast to the more aggressive approaches of Google and Visa.

American Express established an office in Silicon Valley to tap into local startup talent. The business will be run by Harshul Sanghi, managing partner at the company's enterprise growth group and the former head of Motorola Mobility Ventures. The company said he brings a deep understanding of the venture community.

"The payments industry is undergoing a fundamental change as the very nature of commerce is redefined," Sanghi said in a statement today.

Despite its focus on start-ups, American Express is looking to bulk up internally as well. The company is looking to hire a director for digital payments. The director is expected to work with a newly created digital payments team designed to work on its mobile payments system for customers.

Schulman, head of the enterprise growth group, recently talked about the need for more partnerships to drive the adoption of mobile payments. The company has partnered with Verizon Wireless to offer carrier-billed payment services through Payfone, which the two have invested in. In addition, American Express has worked to get its Serve digital wallet to run with Verizon and Sprint Nextel.

American Express has also said it would work with ISIS, the mobile joint venture between Verizon, AT&T and T-Mobile USA. The venture is planning to create a mobile-payments system next year.

Google, meanwhile, is pushing forward with mobile payments--using the smartphone to make payments at a retail counter, taxi cab, or subway turnstile--with its Google Wallet program. The company has been rolling out the service over the past few months.