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Credit card network giants, Visa and American Express, recently made back-to-back announcements of new person-to-person services that they are introducing as a way to enable individuals the chance to pay one another directly without the use of cash or checks. Through these person-to-person payment services, both Visa and American Express are taking aim at PayPal Inc., which dominates the person-to-person space.

Consumers using Visa’s service can send funds directly from their bank account to another person’s Visa account by simply entering the recipient’s 16-digit Visa, email address or mobile phone number. Once sent, the payment would show up in the account linked to the recipients’ credit card, debit card or prepaid card or the recipient would receive a notice to OK the transfer.

The service, which eliminates the inefficiencies of cash and check payments between individuals, could be used in a number of ways, such as ensuring a child away at college has money on a prepaid Visa or to pay back a friend that charged an item on his Visa credit card. Visa said the service will be available by the second half of 2011 in the US. The new Visa personal payments service was made possible through technical enhancements to VisaNet, Visa’s global payments backend processing network, and through changes to allow the system to accept incoming funds.

As part of the announcement, two financial companies that provide technology to banks, CashEdge and Fiserv, now will have access to VisaNet in order to operate the service on behalf of Visa. Fiserv, which is behind ZashPay, and CashEdge, which has a service called Popmoney, uses the technology that makes email or mobile person-to-person non-cash exchanges possible.

Fiserv says more than 700 financial institutions have signed up for ZashPay, and the service is already live at 500 banks and credit unions. CashEdge’s Popmoney is available at more than 170 US financial institutions. Both providers currently allow users to send money from their bank account to a recipient’s account as long as they have the account number as well as either the recipient’s email or mobile phone number. With the Visa partnership, customers also will have the option to direct funds to their eligible Visa-branded card too. Account holders of these two services will be able to send money to any Visa cardholder, even if they themselves are not Visa account holders.

American Express followed in Visa’s footsteps about two weeks later and announced a digital payment and commerce platform called Serve. Through this service, consumers can make purchases and person-to-person payments online via mobile phones and at merchants that accept American Express cards. Consumers will receive a Serve general purpose prepaid card, which they can fund through bank accounts, credit or debit cards to buy items online, pay other Serve accounts or get cash from ATM.

Serve came to be because American Express integrated its technology with the Revolution Money format, which it acquired in 2010 for about $300 million. Serve can be accessed from a new application for iPhones and Android devices, as well as through Facebook. Serve charges 2.9% plus 30 cents if you use a credit card to fund the account, but Serve is waiving the credit card funding charge for the first six months. Cash, debit card and bank transfers are free.

Some recent startups like Venmo and Square are gaining in popularity too. Venmo allows users with a text-enabled US cell phone to send IOUs to friends. There are no processing fees or costs for individuals since Venmo makes its money from businesses like cafes and restaurants that use the product to collect payment. Square enables anyone to accept credit card payments.

Square offers a free credit card reader to users that plugs into an iPhone or Android phone or iPad, enabling users to swipe the magnetic strip in exchange for 2.75% of the transaction. Square reports that it is processing about $1 million in payments per day and up to 100,000 new users are signing up every month, showing that there is a growing market in the US for personal payments. However, the market for person-to-person payments in the US has long been dominated by online payment company, PayPal, which has more than 94 million registered accounts active within the last year on a worldwide basis.

For further insight, contact Michelle Evans, Consumer Finance Analyst, at michelle.evans@euromonitorintl.com.

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