Visa Teams With Fiserv, CashEdge in P2P Push

Visa Inc. is making a bigger play in person-to-person payments by teaming with CashEdge Inc. and Fiserv Inc. for new options in money transfers to and from Visa cards.

The separate deals with two of the leading P-to-P providers could help the San Francisco card brand route more transactions over its network. The deals also could nudge card issuers to comply with Visa mandates requiring its bank partners to participate in its card-to-card transfer service.

Visa on Wednesday plans to announce that CashEdge’s Popmoney and Fiserv’s ZashPay systems, which are offered through bank websites, will allow consumers to send and receive payments directly to and from their Visa-branded credit, debit and prepaid cards. 
“What we consistently heard from clients is they want … [to offer consumers] a range of options in how they … send and receive money, and they want Visa to be one of those options,” Kelly Alpert, the head of global money transfer at Visa, said in an interview on Friday.

Popmoney and ZashPay now allow users to send and receive payments by pulling funds from bank accounts and transmitting them primarily as an automated clearing house transaction. CashEdge said it plans to offer Visa Money Transfer this summer and Fiserv said it plans to do so later this year.

The deals are Visa’s latest push to advance its card-to-card service, which has been available to Visa’s foreign issuers since 2002 and in the U.S. since 2009.

To grow adoption, Visa mandated that its U.S. card issuers and their processors be set up to receive payments on behalf of debit and prepaid card customers by October 2010. It has a similar mandate for issuers to receive payments on a Visa credit card by April 15.

Alpert said not all issuers have met the October deadline nor will they all meet the April deadline. Visa expected this, since the service requires technical changes to processing systems.

The majority of Visa’s U.S. issuers are compliant with the mandate and the rest will likely put the functionality in place during the next 18 months, Alpert said.

By mandating that issuers be able to receive the payments, Visa said it hopes to entice issuers to offer the service to senders.

Partnering with Fiserv and CashEdge is a “great move” to help resolve “a chicken and egg” problem, said Gwenn Bezard, a senior analyst with the Aite Group LLC research firm in Boston.

Issuers would still have to comply with Visa’s mandate even if they use the CashEdge or Fiserv service.

Fiserv said 700 banks have agreed to use ZashPay and 500 are live with the service. About 200 banks use CashEdge’s Popmoney service. Both vendors said they will offer Visa’s service as an optional add-on to their bank clients.

The deal is a “phenomenal win” for Visa, Catherine Palmieri, a payments industry analyst and the former global head of product and marketing for CashEdge, said in an e-mail.

Visa has “finally been able to get into the 'logged-in’ part of the bank’s customer relationship — an area both Visa and [MasterCard] have coveted but never been able to broach,” Palmieri wrote. The deals also are a boon to Fiserv and CashEdge, which can offer banks the ability to send payments internationally.

Neil Platt, the senior vice president and general manager of U.S. banking for CashEdge in New York, said Visa also helps solve a problem that prevents many P-to-P transfers from being quickly completed.

“One of the most common disconnects in Popmoney today is [that] people, as they receive funds, do not have at their immediate disposal their checking account information,” Platt said. “But most people carry a Visa [card] with them.”

Banks may also be able to generate fee revenue from the added feature. Fiserv has said many of its clients charge a fee for ZashPay.

Erich Litch, the president of digital channels at the Brookfield, Wis., vendor, said that he expects banks will experiment with a “mix of different pricing” schemes for P-to-P payments.

FirstBank, the subsidiary of FirstBank Holding Co. in Lakewood, Colo., began offering its online banking customers the ability to send money through Visa’s money transfer service in the third quarter of 2010 through a pilot with Visa.

FirstBank also offers a P-to-P transfer service it developed internally that allows customers to send money through ACH, said Chris Evans, the senior vice president of online and telephone banking services at FirstBank.

“The Visa product was really attractive to us because … it uses the card network,” Evans said.

FirstBank customers can send and receive payments on debit cards. The bank is working on adding the ability to receive on credit cards, Evans said.

The limitation FirstBank has encountered is that Wells Fargo & Co. and JPMorgan Chase & Co. — two of the banks with the largest number of deposits in its key markets — are not equipped to receive payments. However, U.S. Bancorp, another large player in its markets, is able to receive, he said.

Wells Fargo plans to implement the service but “it’s too early to speculate about timing,” a spokeswoman said in an e-mail. “Visa understands that our current priority is ensuring a successful merger between Wells Fargo and Wachovia and, therefore, we will not be able to meet the suggested date.”

Bank of America Corp. is working on being able to receive on debit and credit cards and plans to have the credit card functionality in place in the April time frame, a bank spokeswoman said.

A spokesman for PNC Financial Services Group Inc. said it has met the requirements to receive the transactions.

Spokesmen for Citigroup Inc. and JPMorgan Chase did not comment. A spokeswoman for U.S. Bancorp did not respond to a request for comment.

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