CashEdge Inc. hopes to help its client banks reach a wider audience through its Popmoney electronic payment service by making it possible to get cash payments.
Popmoney is a service sold to banks that lets their customers transfer money through the automated clearing house system to another person's bank account, even if the sender does not know the account number. Though CashEdge considers this service successful, its focus on electronic payments limited its audience.
"If you're going to be all about frictionless money movement, there has to be a cash component," said Neil Platt, CashEdge's senior vice president and general manager of U.S. banking.
In the first half of 2011, Cash-Edge plans to let people get funds as cash through a partnership it announced Wednesday with MoneyGram International Inc.
Platt said that the option to get funds at MoneyGram sites sidesteps the need for the recipient to have a bank account, opening up the Popmoney service to the underbanked. It would also let recipients obtain funds internationally, whereas CashEdge's current service requires recipients to have a bank account within the United States. The top request among Popmoney users was for an option to get money internationally, Platt said.
Recipients who do not bank with a client of CashEdge would use a Popmoney website today to direct the funds to the proper bank account. When the MoneyGram service is integrated, recipients could use the website to direct funds to a MoneyGram site.
Platt said that banks also would have the option to charge a fee for delivering cash through MoneyGram, though the companies have yet to determine how to enforce the fee in cases where the delivery option is left up to the recipient.
Catherine Palmieri, CashEdge's global head of product and marketing, said the MoneyGram option would let banks introduce themselves to underbanked consumers through the Popmoney service. "We see this as delivering an opportunity to banks … to acquire new customers," she said.
Tim Summers, a vice president and the global head of strategic partnerships at MoneyGram, said that, similarly, the partnership would open up MoneyGram to a new audience.
Though many of the people who send and receive funds through MoneyGram have bank accounts, Summers said, letting people send money through Popmoney would make MoneyGram appealing to "that customer segment … that maybe doesn't look like the traditional money-sender today."
Aaron McPherson, a research manager for payments at the Framingham, Mass., research firm IDC Financial Insights, said that the MoneyGram link addresses a pain point in any electronic person-to-person payment system: "getting money in and getting money out — this makes a big difference in getting money out."
McPherson said he has repeatedly tried to use P-to-P systems for their advertised purposes, such as splitting the cost of a meal, but that recipients have begun to object because they do not want to go through the steps to guide payments into their own accounts.
"I tried to do the split-the-check thing again last week, and everyone just refused," he said.
A friend who gets an e-mail from Popmoney or a rival service is told he has money waiting for him, but "he doesn't," McPherson said. "He doesn't have anything. He has to enroll."
Adding the cash option through MoneyGram should resolve this, he said, and it also makes Popmoney a better option for payments among relatives, such as a parent's sending money to a child who may lack a bank account.