Fifth Third Bancorp plans this year to adopt CashEdge Inc.'s Popmoney electronic payment service, which lets people transfer funds to another person's bank account through the automated clearing house system.
Fifth Third will position the product as a way for its customers to address different financial situations, such as collecting funds for a youth league or as a potential option for rent payment, said Larry McClanahan, the banking company's vice president and director of alternative delivery. The companies announced Fifth Third's plan Wednesday.
Ron Shevlin, a senior analyst at the Aite Group LLC research firm in Boston, said other banks could use the same marketing approach to help build consumer demand for person-to-person payment systems.
"I don't necessarily think [CashEdge's agreements] are a response [to] consumer demand just yet," Shevlin said. The marketing of such products "needs to be very specific around the use case," he said.
Fifth Third expects a "fairly good number" of its customers to use the Popmoney transfer service when it is introduced at midyear, McClanahan said.
Senders would transfer funds using a recipient's e-mail address, mobile number or bank account information.
If the sender does not know the recipient's bank account number, CashEdge would send a text message or e-mail with instructions on how to receive the funds.
If the recipient is a customer of a CashEdge bank client, he or she can go to the banking company's online banking site to complete the transfer. Otherwise, the recipient is sent to a CashEdge-run website and enters his or her bank information to complete the transfer.
In general, consumer adoption of the service is "way ahead of where we thought we'd be in terms of consumer use," said Neil Platt, a CashEdge senior vice president and its general manager of U.S. banking.
PNC Financial Services Group Inc. and First Hawaiian Bank were among the first Popmoney clients.
CashEdge recently added gift cards as an option for funds transfers. Recipients are also to be given the option this year to redeem funds as cash through a partnership with MoneyGram International Inc.
