How Banks Are Looking to Become Serious Players in P2P Payments

Electronic person-to-person payments have been around this entire decade, but they're still largely the domain of specialists such as PayPal Inc. and a host of tech companies. But leading bank processors are getting into the P2P act, and if they're successful they could spur greater usage from the consumer mainstream and confirm banks' Web sites as go-to places for new payment services. Leading bank processor Fiserv Inc. this week unveiled its personal-payments service that will become available to the 3,100-plus financial institutions in Fiserv's online bill-payment network in the first half of 2010. The service leverages the updated CheckFree RXP bill-pay platform that Fiserv acquired two years ago when the company bought bill-pay leader CheckFree Corp. “Consumers can sign up for [the service] within their existing online-banking relationship,” Steve Shaw, director of strategic marketing in Fiserv's electronic banking services unit, told Digital Transactions News at the Bank Administration Institute's BAI Retail Delivery conference in Boston. Using an e-mail address or mobile-phone number, customers of banks offering the service will be able to send money to anyone they know, according to Fiserv. Payments will be deposited directly into the recipient's account and confirmation of payment will be sent to the recipient's e-mail address or mobile number. Payments will be screened though Brookfield, Wis.-based Fiserv's FraudNet automated fraud-detection system. The service also will be available through mobile devices, at first using short-message-service (SMS) technology, which powers text messages. Shaw notes that Fiserv's total clientele of 16,000 is much larger than the initial target users. “If we can make it a unique value proposition to them … this potentially could be a very valuable network that many consumers can tap into,” he says. Fiserv will brand the service and P2P network before the launch. But Fiserv wasn't alone this week in expanding the frontiers of P2P payments. Rival Fidelity National Information Services Inc. (FIS), which absorbed bank processor Metavante Corp. a month ago, said it would integrate PayPal's P2P service into its online bill-pay service for financial institutions. PayPal, whose original franchise was person-to-person payments, this week officially opened its payments platform to third-party developers, introducing a raft of new application programming interfaces to ease integration. The system enables outside software developers to devise services, including P2P payments, which integrate with PayPal (Digital Transactions News, Nov. 3). Another early user of PayPal's API for P2P is S1 Corp., which is developing a service for mobile phones. Frank D'Angelo, executive vice president for FIS payment solutions group and a veteran of Metavante, tells Digital Transactions News that both Fidelity and Metavante were working on their own P2P services before the recent merger, with Metavante “a little farther along.” But the combined company concluded that PayPal's technology could get FIS into the P2P business quickly with a good offering. “What we're trying to do is make payments as easy as possible,” he told Digital Transactions News at the BAI conference. John Schulte, senior vice president and chief information officer at Mercantile Bank of Michigan, says customer demand is rising for P2P payments and he wants his bank to be early in the market. “It's about beating our competitors to this,” he notes. Mercantile, which is using S1 Corp. and the PayPal API, will commercially launch its handset-based service in the first quarter, Schulte says. Mercantile has banks in Grand Rapids, Holland, and Lansing. Also this week, money-transfer technology provider CashEdge Inc. and mobile-commerce services provider Firethorn Holdings LLC announced plans to bring to market a mobile P2P system that integrates their technologies. With the service, financial institutions would be able offer their customers the ability to send electronic payments using CashEdge's POPmoney P2P service from within their Firethorn mobile-banking application by using the e-mail address or mobile phone number of the recipient.