Privier Inc. has developed ATM software that enables funds-transfer recipients to withdraw cash from any participating machine.
The Charlotte, N.C.-based company plans to launch its service in 2011. Privier wants to build an ATM network for person-to-person funds transfers in the United States, Puerto Rico and the Virgin Islands. All debit cardholders would be able to use the service.
Privier also is in discussions with electronic funds transfer networks to support the service.
The company is attempting to fill a void in that most financial institutions do not offer their customers basic P2P payment services, according to Charles Polanco, the company’s chairman and CEO. “This forces customers that need to make urgent money transfers to go outside of banks and use informal channels such as PayPal, Western Union and MoneyGram,” Polanco says.
Privier is working with an independent sales organization and two ATM manufacturers to launch the service. Polanco declined to name the companies. Privier then wants to add small financial institutions and credit unions to the network via ISOs and ultimately add large banks to the mix.
Privier has several specific features that might help separate it from the established players.
Under its fee model, the ATM operator would charge senders a flat $7.50 for transfers up to the $400 limit. Western Union and MoneyGram charge between $24 and $27 for a $400 transfer within the United States.
The recipient would have the option to withdraw the money from several different participating network ATMs deployed at such common off-premise sites as drugstores and supermarkets, which, unlike many funds-transfer agent locations, often operate around the clock.
To send cash, a consumer would use his debit card and PIN to access an ATM and press the “send cash” button on the screen to start the process. The sender then enters the recipient’s ZIP code to determine the nearest participating ATMs. The sender then enters the amount to be sent. The ATM operator ultimately deducts the funds from the sender’s checking account.
The sender receives a receipt with what Privier calls a money-transfer control number. The receipt also lists several locations where the recipient can withdraw cash. The sender determines how the recipient receives the 16-digit code, Polanco says. “The sender will provide the recipient with the number through a phone call, text message, e-mail, or whatever channel he or she decides to use,” he notes.
Polanco is not concerned with that method’s security or whether a third party could intercept the message. “The key would be, how would the hacker know that a certain text or e-mail has a code that would enable them to collect cash and where?” he says.
If a hacker did manage to withdraw money using a debit card, the funds would be linked to that particular card, Polanco adds.
Recipients need their own debit card to withdraw the sent funds. After using the card to access the ATM and pressing the machine’s “pickup cash” button, the recipient enters the 16-digit funds-transfer code. The recipient would see the transfer amount on the screen and initiate the withdrawal.
Privier’s target customers include parents with children in college and consumers who need cash in emergencies, according to a company presentation provided to PaymentsSource.
Despite more wallet-friendly service from Privier, pricing “isn’t necessarily an important decision factor as one would think,” contends Red Gillen, a senior analyst with Boston-based Celent LLC. “What’s even more important is the trust factor,” he says.
Both MoneyGram and Western Union are established brands consumers easily recognize, Gillen adds. “The low-cost approach may not be the winning approach,” he says.
It remains unclear how much emerging technology will change the funds-transfer market.
Gwenn Bézard, research director of Boston-based Aite Group LLC, believes mobile funds-transfer services will become mainstream in the near future. “The time has come for technology disruption in money transfers, and we’ve been talking about it for the past 10 years,” he says.
That technology disruption might not necessarily come from MoneyGram and Western Union, which may be more hesitant to embrace new technologies because of the potential negative affect they might have on their agent networks that have been in place for decades, Gillen adds.
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