Fiserv Makes a Push for Real-Time Transactions with Its SpotPay Mobile Service

The electronic-payments industry’s zig-zag movement toward faster transaction times may have received a jolt of new life on Monday with Fiserv Inc.’s announcement of its SpotPay mobile-acceptance service. The service, which at first glance appears to be the latest in a long line of products that let small businesses run transactions on smart phones, distinguishes itself in that it will be marketed solely by financial institutions and will feature real-time funds availability starting next year for debit card and check payments.

While debit card transactions with PINs will typically settle into merchants’ accounts the same day, SpotPay will offer a PIN-less debit capability allowing nearly instant funds transfers. Merchants using the service to image and deposit checks will be able to get real-time settlement as well, according to David Keenan, general manager in Network Solutions at Brookfield, Wis.-based Fiserv. That should be even faster than Check 21, which often allows same-day funds movement.

Key to these arrangements is Fiserv’s ownership of the Morris Plains, N.J.-based Accel/Exchange debit network. The network’s links to some 3.000 financial institutions allow visibility into payors’ accounts to verify funds availability. The network already has experience with PIN-less bill-payment transactions that can be extended to debit card transactions, Keenan says.

When it becomes available, SpotPay’s faster settlement will also rely on a capability Fiserv first demonstrated this spring for its Popmoney person-to-person payment service that allows holders of Accel-Exhange cards to receive money in real time, says Keenan.

Fiserv’s announcement comes as the payments industry has been struggling to define newer, faster methods to move money. In large part, this movement has stemmed from the widespread availability of mobile devices. “We expect instant gratification,” says Keenan. “That’s what the mobile phone has taught us.”

Still, not all banks are ready to speed things up just yet. Last month, a proposal to shave one day off of typical next-day settlement times for automated clearing house transactions fell short of the votes needed to be enacted by NACHA, the rules-setting body for the ACH. Reportedly, the nation’s largest banks voted against the proposal in part to protect lucrative wire-transfer franchises. “[NACHA] has been fumbling with that [same-day settlement idea] for some time. They can’t seem to get traction with it,” Keenan notes.

He sees no such impediments with SpotPay. “I would say emphatically what we are seeing is that financial institutions want to help their customers do transactions in real time,” he says. “They just need the tools to do it.”

With SpotPay, Accel/Exchange member institutions will distribute card readers made by Seal Beach, Calif.-based MagTek Inc. to small-business clients. The devices, which feature a longer read-head than the well-known, cube-shaped reader from Square Inc., can be branded by the financial institution and will link to a merchant’s smart phone via Bluetooth, USB connection, or audio jack. They work with either Apple Inc.’s iOS or Google Inc.’s Android operating systems. The SpotPay app will allow merchants to run credit and debit card transactions and image checks for deposit. The check capability makes SpotPay the second mobile-acceptance app on the market to allow remote deposit capture, following the PayPal Here product unveiled in March.

Transactions will be processed through an arrangement with WorldPay, which in December 2010 certified MagTek’s readers on its platform. While debit and check transactions will ultimately switch out to Accel/Exchange, credit card payments will follow familiar pathways through the Visa and MasterCard networks. That could hinder any movement toward real-time transfers for credit cards for some time, Keeanan says. “We can only go as fast as [the credit card networks] can go,” he says. “But I believe there will be increasing pressure” to speed up credit card payments, he adds.

While Fiserv’s plan is to introduce the real-time service on SpotPay in 2013, Keenan hopes to strike gateway agreements with other debit networks that will allow real-time SpotPay transfers on non-Accel/Exchange debit cards. “We think they’ll want to participate,” he says. “The ability to receive funds in real-time, we believe that will be a pretty powerful differentiator.”

Pricing for SpotPay is 1.99% for swiped transactions, or 3.19% for key-entered ones. The service also carries an $8.95 monthly fee. Up against Square, which charges a swipe rate of 2.75% without a monthly fee, SpotPay is cheaper for swiped monthly volumes between $1,177 and $13,369. Above the latter figure, Square’s newly introduced flat fee of $275 per month (available on volume up to $250,000 per year) makes it less expensive. Banks will have some flexibility in pricing SpotPay, but will generally be expected to hew to listed fees. “That’s the MSRP,” says Keenan. “What we’re not set up for is 3,000 different pricing schemes.”