TUKWILA, Wash.-Originally conceived as a way to split a dinner bill or send a monetary birthday gift, person-to-person (P2P) payments are redefining the way in which member banking is conducted.
"When we rolled this service out to members we thought it would be to reimburse someone for lunch or to contribute to the office pool," said Howie Wu, VP-virtual banking with BECU. "We believed that P2P was the first step in the payment evolution toward a mobile wallet, but we were surprised what it was being used for-it's become a supplement to bill pay."
The $10-billion credit union, which has more than 750,000 members, was using CashEdge as its P2P delivery channel until it was purchased by Fiserv in 2011, explained Wu, adding that BECU was the first credit union to beta test the enhanced offering, Popmoney.
BECU members new to P2P are slowly introduced to the service and are required to meet certain criteria before engaging in large transactions. "There is a grace period after signing up and members have limited access to the funds they can send," said Wu, adding that this time period is generally between 60 and 90 days.
In the last two years, BECU P2P user statistics have spiked across numerous categories. In 2012, for example, there were more than 237,000 transactions representing a 45% growth rate and a 49% user growth rate. And while Popmoney's average customer transaction is $410, BECU averages $569 per transaction.
"We are entirely focused on moving to the digital format," said Fiserv's Senior Vice President for Marketing Electronic Payments, Tom Roberts. He added that the company recently upgraded the platform to Popmoney Instant Payments. Whereas there was the standard ACH transaction or next day payment P2P transaction, now members can transfer funds instantly and bank accounts are adjusted within seconds.
With major banks offering free P2P transactions, such as Chase's QuickPay, Roberts explained that the approximate 1,800 banks and credit unions that are using Popmoney have the option to charge a fee, or not, for the transaction. While Wu said P2P transactions are not profit motivated, more so member driven, the credit union does charge $2 for ACH transactions.
Instant Transfer
While Wu explained that BECU is considering adopting this "instant" upgrade in the coming months, there are logistics to consider before implementation, such as Fiserv networking issues. But as he made clear, "It's absolutely on our road map." Fiserv currently uses Accel payments network and STAR network to facilitate instant payments, which is a temporary roadblock for BECU that is out of network.
There is good reason Wu is mapping out the credit union's P2P journey as 53% of BECU Popmoney users are frequent users, which means they used the service at least three times in the three months. Additionally, 15% of members who received e-mail/mobile payments at BECU have become active senders and 14% of BECU transactions are next day transactions.
An 'Aha' Moment
"Our 'aha' moment was seeing our members adopt this alternative for bill payment," said Wu. While Fiserv's Roberts said Gen Y, specifically 23 to 33 year-olds, were the most active P2P users, BECU's average member age is 42. "Our members are open to new technologies and we are seeing overall adoption rates increase," added Wu.
Aside from a parent transferring money into their college age child's saving account to buy groceries or friends splitting a birthday gift, members are also using P2P to pay their rent, split utility payments or pay for lawn service. "It saves the hassle of going to the bank," said Wu. "Teller-less, remote delivery of funds is the future."
