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American Express is diving into the e-wallet space with Serve, a service that lets customers transfer money to others online and make payments with their mobile phones.

In its announcement Monday, AmEx said Serve is aimed at customers who use cash, checks and debit cards, rather than the company’s traditional credit card users.

Serve accounts will be available immediately in the U.S. and are expected to launch internationally over the coming year.

Mobile payments are a new direction for AmEx as it tries to get a toehold in a rapidly growing market. Research firm Generator Research expects mobile payments to reach $633 billion annually by 2014, with 490 million customers using them.

AmEx’s Serve is meant to capture some of that burgeoning market. It also puts the bank squarely in competition with e-payment king PayPal. Serve grew out of technology AmEx picked up last year through its $300 million acquisition of Revolution Money, a PayPal rival that focused on person-to-person payments.

Serve accounts can be funded with a bank account, debit card, credit card or from funds transferred by another user. The accounts can be accessed through iPhone and Android apps, or through Serve.com and Facebook.

In addition, each user will be given a reloadable prepaid card linked to their Serve account that can be used at any merchant or ATM that accepts AmEx.

Users can set up sub-accounts for children or family members and control where the funds are used.

AmEx is waiving Serve account fees for the next six months, but after that, loading money will cost 2.9% of the transaction amount plus 30 cents per load. However, Serve won’t charge a fee for loading through cash, debit or ACH (automated clearing house) transactions.

ATM cash withdrawals will cost $2, though users get one free withdrawal per month. Setting up accounts and sub-accounts is free, as are user-to-user transactions.

Meanwhile, Google is planning its own foray into the digital payment world. On Monday, the Wall Street Journal reported that Google is partnering with MasterCard and Citigroup to embed payment technology in Android smartphones. The goal is to allow customers make payments at stores by waving their phones in front of a reader device at the checkout.

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A group calling itself the “Deccan Mujahedeen” said it carried out the attacks late yesterday at several locations including the Oberoi Trident hotel and the iconic Taj Mahal Palace.

“We have seen that there is a global trend now to attack Western hotels,” said Rohan Gunaratna, head of the International Centre for Political Violence and Terrorism Research in Singapore.

“The threat to hotels has increased significantly.” Although the Taj and Oberoi are part of Indian-based hotel firms, witnesses said the gunmen had specifically chosen US and British citizens to take hostage.

Other recent attacks in the region have also targeted hotels belonging to Western companies and which are known to host foreigners.

These include: The September truck bombing of Islamabad’s Marriott hotel that killed at least 60; a January assault which killed eight people at Kabul’s top hotel, the Serena; suicide attacks on the Radisson SAS hotel, the Grand Hyatt and Days Inn in Amman, Jordan in 2005; the 2003 blast that killed 12 at Jakarta’s JW Marriott; and a 2002 car bombing that killed 11 French engineers outside Karachi’s Sheraton hotel.

“I think it’s very much an attack on the ‘West’,” said Nick O’Brien, an associate professor in counter-terrorism at Charles Sturt University in Canberra.

Gunaratna said that with Western diplomatic compounds increasingly more secure against bombings or armed assaults, attackers have turned on hotels as “the second embassies”.

The Mumbai attacks are a reminder that any Western hotel in a place such as India which is prone to terrorism should improve its security or at least review it, said O’Brien.

Indonesia’s experience has shown that improving security works, analysts said.

Since the Marriott and other bombings in Jakarta, hotels, office buildings and other potential targets have installed metal detectors, guards with mirrors and other devices to search vehicles.

Some hotels have built special ramps and barriers that make it difficult to drive right up to the lobby.

“It has been a deterrent in Indonesia,” said Sidney Jones, Jakarta-based senior adviser to the International Crisis Group of political analysts.

She said bombers who struck Indonesia’s Bali island in 2005 rejected hotels as targets because of the tighter security. They chose instead open-air beachfront restaurants and another target, killing 23 people and injuring many more.

But while security measures have helped in Indonesia, Jones said “it seems like a hugely daunting task” to protect India’s hotels, partly because of their sheer numbers.

Gunaratna said countries like India and Pakistan that face a significant terrorism threat should ask the government to post armed guards at international hotels. There should generally be greater cooperation between hotel security and government forces, he said.

O’Brien said the best defence is distance and#8212; keeping the hotel well back from a secured perimeter.

But analysts said that unless a hotel is turned into a fortress it is difficult to completely guard against well-trained armed assailants and those who are prepared to die.

“It could in theory be done,” O’Brien said. “But complete security is very, very difficult.” – AFP

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THE challenge to the US dollar’s supremacy in the global financial system is nothing new. Since a few years ago, there have been talks that the greenback’s days as the world’s reserve currency are indeed numbered; even as some politicians, including Malaysia’s former prime minister Tun Dr Mahathir Mohamad, have previously called for the abandonment of the US dollar as the main trading currency.

But lately, the challenge to the US dollar’s status in the international market has intensified, with China leading the call for the creation of a new global reserve currency to replace the greenback.

The emerging superpower recently urged the International Monetary Fund (IMF) to move towards a super sovereign reserve currency and expand the use of special drawing rights (SDRs).

(SDR is an international reserve asset created by the IMF to supplement the existing official reserves of its member countries. The value of SDR is based on a basket of key international currencies, including the US dollar, euro, yen and the pound sterling.)

Backing China’s call for an alternative global reserve currency are Russia as well as the central banks of Indonesia, Thailand and Malaysia.

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz was quoted in Bloomberg as saying that it is a viable proposal that should be considered, while Bank of Thailand governor Tarisa Watanagase believed having an alternative to the US dollar could benefit developing countries.

Over the week, Venezuelan President Hugo Chavez also took a swipe at the US dollar’s global prominence by suggesting a new, oil-backed currency, simply known as “petro-currency”.

The fading support for the US dollar reflects rising international concern that the value of the greenback could be destabilised by the US government’s expansionary policies to lift the country out of recession. This is because any destabilisation of the greenback’s value could disrupt the functioning of the global financial system, which is currently based on the US dollar.

The international pressure facing the US dollar is real. But like it or not, the US dollar, which took over the role as an international reserve currency from the pound sterling after World War II, is still king, and it is not likely to be replaced any time soon.

Fitch Ratings head of Asia James McCormack tells StarBizWeek that establishing an alternative to replace the US dollar as the world’s reserve currency is a long and gradual process.

RAM Holdings Bhd chief economist Dr Yeah Kim Leng concurs, saying it is difficult to replace the US dollar in the immediate term.

McCormack also points to the fact that the world’s commodities are all priced in US dollar, hence any adjustment will take an even longer time.

But China’s proposal for a new global currency benchmark should not be taken lightly. Economists believe that the proposal could lead to further serious debate over the role of the greenback.

Yeah says the Chinese government’s suggestion has brought greater awareness to the international circle of the urgent need for a global financial reform.

He believes that the platform has been set for major powers to look into an alternative benchmarking system to bring about global financial stability.

Of late, the US dollar has been strengthening against major currencies, and this is due mainly to the global trend of deleveraging and repatriation of funds. But the strength of the US dollar is not sustainable and economists expect other currencies to adjust higher against the greenback towards the end of the year.

Maybank Investment Bank Bhd (Maybank IB), in its report, says bad fundamentals will eventually catch up with the US dollar.

Large current account deficits, low savings, a contracting economy and zero interest rates spell huge problems ahead for the US dollar.

To date, China is the largest holder of US debts in the world with about US$740bil worth of US securities as its assets. Being the largest economy in the world, the United States has been able to absorb the excess savings, particularly that of East Asia, over the years to finance its deficits.

But the tide is expected to turn soon for the United States. MaybankIB says the United States will find it increasingly difficult to tap the savings and trade surpluses of the rest of the world to finance its burgeoning fiscal deficits over the next few years, given the weaknesses surrounding the country and its currency.

According to Yeah, the emphasis now should be on ensuring that a currency’s volatility does not impede or disrupt global trade and investment.

Towards this end, China has exerted its influence on the global economy.

Since late last year, the People’s Bank of China has signed bilateral currency swap arrangements worth up to 650 billion yuan (RM348bil) with central banks of South Korea, Hong Kong, Malaysia, Indonesia, Belarus and Argentina to promote trade and investment.

The arrangement between China and Malaysia is worth 80 billion yuan (RM43bil), with an effective period of three years that could be extended by agreement between the two sides.

(A currency swap is an agreement whereby two countries agree to exchange a given amount of currency at an agreed upon interest rate and a common maturity date for the exchange.)

China has announced its plans to further expand the use of currency swap with other countries to promote trade and investment.

The move will lead to a wider usage of the Chinese currency – which cannot be freely traded currently on the international market – in global trade. – The Star

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