A triumvirate of three major banks have launched a new person-to-person payment venture that could potentially serve millions of consumers.
The clearXchange service is the first bank-owned solution of its kind, its backers say, and allows customers to send each other money with either a mobile number or email address. It’s a joint venture of Bank of America, JP Morgan Chase and Wells Fargo and based in Charlotte, N.C.
While aimed at P2P giant PayPal, which reported $27.4 billion in first-quarter money movement this year, credit unions also should take notice, a veteran consumer financial analyst says.
“While most people who use credit unions don’t have checking accounts at these three major banks, they know people who do and they’ll hear about as more people use these P2P services,” says Ron Shevlin of Aite Group in Boston.
“In the short run, this announcement doesn’t mean a whole lot to credit unions, but what it does in the long term is raise the bar on online capabilities that credit unions need to offer,” Shevlin says, noting that most PayPal activity currently is consumer to business rather than person to person.
“Person-to-person payments are something that have been around for a long time but the uptake on it has not been particularly high among banks and credit unions,” he says. But that could change in the long term, Shevlin says, calling P2P and other developing channels “the last greenfield of electronification of payments.”
clearXchange is being rolled out nationally and the banks said they plan to expand it to include other financial institutions and endpoints “to create a money movement capability across the industry.”
Along with PayPal, CashEdge’s popmoney and Fiserv’s ZashPay, which already claims hundreds of credit union clients, are seen as the primary competitors for clearXchange now.
Niche players also are wading in. Some are creating new services, such as Iowa-based Dwolla, while others are partnering with PayPal directly, such as South Carolina-based online banking supplier PM Systems.