Wednesday, June 24, 2009

P2P payments without the PayPal

I had never thought of alternatives to PayPal that maybe my parents would trust. When it comes to sending money around, people are rightly cautious when it comes to the use of third-party services. And unfortunately PayPal has become a target for a large amount of phishing scams, unfortunately hurting their image through no fault of their own. It seems though that other people have been thinking of alternatives.

Yesterday I received a message from CashEdge, (who I mentioned in this blog in 2006 and it appears their PR team still has my name on file. The power of PR; it got you another mention!). They are talking about an new approach to person-to-person money transfers that could be offered by banks - i.e. the bank you already know and trust with your hard earned cash. It certainly sounds appealing. So what's the deal? According to CashEdge:

Today, CashEdge launched the first person-to-person payments service for banks – POPmoney – that will enable consumers to send email and mobile P2P payments directly from their bank account to friends, families, and others, using only an email address or a cell phone number. There has been a lot of buzz about P2P/mobile payments recently, but CashEdge offers three critical advantages: 1) POPmoney is the only service built specifically for banks; 2) CashEdge has a proven record of success in providing risk-management money movement services to the top national banks; and 3) unlike other payment networks, banks have a built-in customer base (current bank customers) for this service.

So this sounds like a good idea for US banks, which are still tied to paper checks (cheques) and are desperately trying to find faster ways to move consumers away from them. It sounds like a potentially great source of new revenue which is effectively lost today to PayPal. And from what little I know of CashEdge, they have the ability to provide this solution to mid-tier banks that don't want to build it themselves, as a software as a service (SaaS) offering.

For me what will make or break it is not CashEdge, or the announcement of an offering that does not expect to have customers it can name until the summer (in which hemisphere?), but the pricing that banks attach to the service. Will they try and undercut PayPal, or will they charge a premium, knowing that mom-and-pop wouldn't use PayPal anyway. Go too high and mom-and-pop, with plenty of time on their hands will probably write that check, stuff it in an envelope and put a stamp on it.

Good luck CashEdge, but I'll believe it (POP) when I see it unfortunately and will happily continue using PayPal for now. That feeling is only reinforced by an announcement that seems way too early, or at least a missed marcom opportunity in the buzz and advertising strength of a bank saying, "Use our great (POP) service" and other banks saying, "How do we do that?". The credibility of P2P payments (at least in the US) rests with the banks, and their adoption of CashEdge, or other vendors that have been pre-warned that they have until the summer to make an announcement first.

A post from the Improving It blog

Download the podcast of this blog post

No comments: