TUKWILA, Wash.-It's payback time as two of the nation's largest credit unions launch mobile person-to-person (P2P) payments platforms to reclaim some of the thunder stolen by the likes of PayPal.
"The traditional payment model is changing and will have a bottom-line impact on BECU, either in the form or fee income or interchange revenue or both," said Howie Wu, VP-virtual banking at the $8.5-billion CU.
The new face of electronic payments enables members to transfer money to one another from their CU's existing online or mobile banking site, simply by indicating the recipient's e-mail address, mobile telephone number or bank account.
"We have already heard from many members that they are looking for P2P payments to not only be available, but available on the mobile device," said Wu.
That kind of functionality will be offered free to members in March by BECU and San Francisco-based Patelco CU via the CashEdge POPmoney P2P payments solution. POPmoney will be integrated into the CUs' online banking platforms, where all P2P transactions can be viewed alongside all other transactions.
"POPmoney is the only service that enables financial institutions to offer P2P payments directly to their customers from within their current online and mobile banking portal," which ensures optimal security and convenience, said Neil Platt, SVP and general manager, U.S. Banking, at New York-based CashEdge.
"There is no need to set up new accounts and passwords, maintain separate balances nor track payment activity through a new interface," such as PayPal or Obopay, said Platt.
"As alternative payment solutions such as PayPal and BillMeLater continue to mature, consumers will come to expect more convenient and cost effective ways of transacting," Wu explained.
The payoff for BECU and Patelco? "These services aren't going to make a lot of money, but they may entice someone who wouldn't give a credit union a second thought into considering using us," suggested John Shields, SVP/CTO, at $3.8-billion Patelco.
"POPmoney will provide for a great member experience and allow BECU the opportunity to push deeper into the alternative payments arena," added Wu. "The pendulum has swung towards non-price-based competition for consumers' business and loyalty." BECU is considering whether to charge members a fee for expedited payments.
On the heels of established electronic services such as bill payment, online funds transfers and mobile banking, members should easily take to P2P payments, continued Wu. "We expect adoption to pick up quickly after launch, as our members have asked for such solutions integrated within online banking," he said.
More than 25% of BECU's 280,000 online banking members actively use bill pay, about 15% make external funds transfers, and 2% of online banking members use mobile banking, Wu said. "This has set a good stage for the launch of the additional P2P payment options."
POPmoney mobile payments can be made via SMS text messaging or downloadable applications. POPmoney users can receive payments into their existing online banking account if the money was sent by a fellow POPmoney user. People who can't use POPmoney through their financial institution can register at POPmoney.com to link a bank account and receive POPmoney payments.
