Contracts that three Canadian banks announced this week signal a determination to claim a central role for banks in person-to-person payments.
TD Bank Financial Group, Bank of Nova Scotia, and Canadian Imperial Bank of Commerce said Wednesday that they had signed with CertaPay Inc. of Toronto, which is working with them to let consumers e-mail money debited from their accounts.
The system would rely on Canadas existing banking infrastructure to execute transactions between individuals. Consumers would access the service through the banks Web sites, and payments would move over a system that is similar to the automated clearinghouse network in the United States.
In contrast the United States leading P-to-P payment provider, PayPal Inc., requires customers to open PayPal accounts from which they can e-mail money.
CertaPay provides a closed circuit with the members of the Canadian payment association, said Albert Wahbe, chief executive officer of e-Scotia and Bank of Nova Scotias executive vice president of electronic banking. It is done with a standard online account system, giving ease of use and the guarantee of your bank.
Chuck Hounsell, a senior vice president of TD Canada Trust, said a person-to-person system must be very bank-centric and allow banks to make secure payments through our networks.
The service, branded under each banks name, will let customers of the three banks select the person-to-person payment option from their menu of transactional services. CertaPay will charge a 25-cent fee to the bank for each transaction, and the banks will decide how to structure their customer fees.
Unlike the popular PayPal system, which is used primarily to execute online auction payments, CertaPay and its three Canadian partners are targeting payments between family members, friends, and from consumers to small home businesses. This market may be a tougher nut to crack than the online auction payment market, analysts said.
Consumer adoption will be slow, said James Van Dyke, a senior analyst at Jupiter Communications, unless they can isolate a particular market needing to send money over the Internet, like parents to college students.
Beth Robertson, a senior analyst at TowerGroup, agreed with that outlook. There is certainly a role for banks to get into person-to-person payments, but there is a whole behavior change that has to occur for consumers, she said.