Entering the Faster P2P Fray, Co-Op Launches Sprig, a Wallet App for Credit Unions

The effort to bring near-real-time person-to-person payments to the customers of smaller financial institutions took another step on Wednesday with the announcement the Sprig digital-wallet service from Co-Op Financial Services, a processor and network operator that links some 3,000 credit unions.

The new service, available for both mobile devices and PCs, allows customers of Co-Op clients to consolidate checking, savings, and card accounts held at one or more institutions into the Sprig wallet. The service supports payments to individuals with accounts at other Co-Op client institutions for now, but will begin offering so-called out-of-network P2P payments by the end of June, says Kathy Herziger-Snider, vice president of product development at the Rancho Cucamonga, Calif.-based Co-Op.

Sprig also offers mobile remote deposit capture for the iPhone, and will add Android-phone support next month and tablet-based capture later in the year.

Sprig transactions employ a so-called good-funds model, which relies on visibility into the sender’s account to verify funds availability. This allows fast settlement—typically within minutes—and contrasts with the automated clearing house network, which connects most financial institutions but requires next-day settlement. Herziger-Snider tells Digital Transactions News the wider service will call upon technology from Dwolla, a Des Moines, Iowa-based payments startup, as well as other, unnamed partners. Last year, Dwolla introduced its FiSync technology, which allows Dwolla account holders to make real-time transfers from their bank account to their Dwolla account. Co-Op is an investor in The Members Group, a Des Moines, Iowa-based credit union service organization that is in turn an investor in Dwolla.

“Where we can, we’ll always leverage a real-time network,” says Herziger-Snider. “The ACH will be the last resort.”

The new P2P service from Co-Op follows by days the introduction of Shazam Bolts, a similar service from the Johnston, Iowa-based Shazam debit network, another system that links primarily smaller financial institutions. The Bolts mobile app currently allows users to check balances and receive alerts, but Shazam will launch a near-real-time P2P capability this summer.

Sprig is emerging from what Co-Op calls a “soft launch” that started early last year. Nearly 300 credit unions have adopted the product, and Co-Op says it has already processed almost 1 million transactions. The technology stems from work done by FSCC LLC, a company that performs so-called shared-branch processing for credit unions. Co-Op acquired FSCC in December 2011.

The new service is emerging at a time when Herziger-Snider sees growing consumer demand for faster P2P service as users move increasingly toward digital replacements for paper-based transfers. “The volumes with P2P right now are not significant, but as consumers move away from checks there is demand for real-time capability,” she says. “Consumers are definitely looking for a fast, easy, seamless way to move money.” Credit unions, she adds, are eager to meet that demand, and remain competitive with larger financial institutions.

Co-Op is offering Sprig at no charge beyond standard interchange pricing. Credit unions in turn may offer it free to members or price it. The system requires very little integration time for credit unions, Herziger-Snider says. “It leverages the existing infrastructure,” she says. “It’s very easy to activate it. There’s not a lot of development.” Co-Op links 30,000 ATMs and processes 2.5 billion transactions annually.

Additional features are likely to be added to the Sprig wallet, including loyalty and rewards, Herziger-Snider says. Co-Op also will offer some of the apps, for example, the ability to make out-of-network payments, on a standalone basis to larger credit unions that may have already developed wallets of their own, she adds.