Does your bank allow you to make mobile person-to-person (P2P) payments? If not, that may be about to change. Two companies at the forefront of financial technology have partnered to expand mobile P2P payments at hundreds of bank and credit unions — one of which could be yours.
Dwolla, an online- and mobile-payments network, has partnered with financial-services provider mFoundry to power P2P payments, the two companies announced on Wednesday at the BAI Retail Delivery conference in Washington D.C.
Many consumers may already know how P2P payments work: an individual sends money to someone else by providing the recipient’s email address or phone number. Banks either offer the offer service in-house or consumers can use third-party services, such as Popmoney, to make P2P payments. The sender may be charged a fee.
Depending on how the payment is sent, recipients have to provide their bank account information and verify their identity to collect the P2P payment.
Currently, mFoundry touts a growing list of clients including Bank of America, PNC Bank, IBC Bank, Zions Bank, First Tennessee Bank and Sun National Bank. The company’s current network encompasses more than 800 banks and credit unions.
The partnered banks and credit unions that use mFoundry’s mobile banking platform, called Fin.X, can quickly deploy P2P payments for their mobile-banking customers. Customers may charge a nominal fee for the service — many consumers will and do pay for the convenience.
The market of P2P payments is expected to grow to more than $50 billion by 2017, according to a study by First Annapolis Consulting.
The big banks have recognized that growing market for P2P payments and they’re working on their own networks to process P2P payments. Last year, Bank of America, Wells Fargo and Chase collaborated on a projected called clearXchange, which eliminates the recipient’s hassle of entering their account information — if the recipient’s bank is a partner of clearXchange.
The three banks are in talks with Popmoney, which serves P2P payments for banks such as Citibank, PNC Bank and Ally Bank, to link the two P2P networks to boost consumer adoption.
At the end of the day, it may come down to fees.
While many banks offer P2P payments for free, some banks charge for the service. For instance, Fifth Third Bank charges $0.99 per P2P payment sent (through Popmoney). Dwolla, known for its low-cost payment structure, only charges the recipient $0.25 per transaction of more than $10 — all other transactions are free.
For more on how P2P works, and how people do or don’t use it, read our earlier article, called “splitting the dinner bill is not the way forward.”