American Express Co. today launched Serve, a digital payment platform that enables consumers to make payments online and transfer money to other individuals. The service will compete with PayPal, eBay Inc.’s payments unit. U.S. merchants that accept American Express can accept Serve payments immediately.

American Express says it designed the service to appeal to consumers who commonly use cash and debit cards, not credit cards, to complete transactions. A consumer can load funds from his bank accounts, debit cards, credit and charge cards to his Serve account. The prepaid funds can then be used to complete transactions with merchants that accept American Express for payment. An American Express-issued payment card also is for offline transactions and ATM withdrawals.

Funds also can be transferred among individuals with Serve accounts, similar to PayPal. The accounts can be managed online at Serve.com, through Apple and Android mobile apps, and through Facebook. One Serve account can have multiple sub-accounts. For example, parents can manage a Serve account and have the prepaid cards for their kids. Parents control the amount of funds available to each card account at any time.

“Serve is a new type of payment platform that isn’t tied to a single card or mobile operating system,” says Dan Schulman, group president of enterprise growth at American Express. “From day one it brings tremendous assets to the alternative payments space and gives consumers an option to shop online and offline at merchants who accept American Express.”

Merchants pay transaction fees for Serve payments but the fee is less than for an American Express credit card transaction, the company says. It did not disclose the fee. A consumer pays 2.9% plus 30 cents per load to add money to his account. Consumers get one free ATM withdrawal per month; additional ATM withdrawals cost $2.  American Express says it is waiving all consumer fees for the next six months. Serve is available only in the U.S. but American Express says it expects to launch internationally in the next year.

The company says Serve’s platform evolved from its acquisition of Revolution Money, which it purchased for $300 million in 2009.