NYCE Corp., the electronic funds transfer network soon to be divested from First Data Corp., is looking to domestic money transfers for fresh market opportunities.
Last week NYCE introduced what it calls the first account-to-account transaction service to run over an automated teller machine network. It is now trying to get member banks to offer the service to their customers. Banks will set the cost of the service.
NYCE said it is still certifying all its 2,200 members and otherwise preparing them to receive these transactions. That task should be completed in about six months.
James S. Judd, a senior vice president with the Montvale, N.J., company, said every member will be required to accept A-to-A transactions, though sending them will be optional.
NYCE, which First Data must sell in the next few months to buy Concord EFS Inc. of Memphis, has a slight edge over Concord's Star network, which has also been preparing its 6,100 members to run account-to-account transactions.
Barbara Span, a Star spokeswoman, said it has not gone live with its service because it wanted a majority of its banks certified and equipped first. That should happen in about two to three months.
Like NYCE members, Star financial institutions will have to accept A-to-A transactions, and sending them will be optional. Ms. Span said the receiving bank gets the interchange, but the sending bank will be able to charge the sender a fee.
Pulse EFT Association, another major EFT network, also plans to begin an A-to-A program this summer.
Mr. Judd said the major difference between NYCE's account-to-account transfers and its rivals' person-to-person transfers involves immediacy. Funds sent through the NYCE service will be available to the recipient as quickly as an average ATM transaction is registered, he said.
Typical A-to-A and P-to-P transactions take one to four days to complete. eBay Inc.'s PayPal, one of the most popular P-to-P Internet services, uses e-mails and requires both sender and receiver to be PayPal members. Several large banks that have entered the remittance market use the automated clearing house; ACH transactions generally take a day or two to clear.
With NYCE's account-to-account service, "there are no intermediaries that may participate, as in any of these other models where there is a noninsured financial institution holding money for a certain period of time," Mr. Judd said.
William Dokas, the president and chief executive officer of American Eagle Federal Credit Union, which started offering the NYCE service to ATM users last month, said it hopes to make the service available to its online customers this summer. The Hartford, Conn., credit union has been promoting the service through newsletters, Web site announcements, branch ads, and customer service calls.
Mr. Judd said the market has potential. There are "a very substantial number of transactions today moving money from one account to another."
Beth Robertson, a senior analyst at the Needham, Mass., financial services consulting firm TowerGroup, said account-to-account services will probably be used most commonly to move funds from deposit to brokerage accounts or other direct deposit accounts owned by the same individual. "It facilitates their cash management of different accounts, and most consumers do have multiple accounts."
Gwenn Bezard, a senior analyst at the Boston technology and financial services consulting firm Celent Communications LLC, said banks have been talking about A-to-A transfers for years but are only getting serious about it now.
