In a world where people want everything to happen faster and easier, instant person-to-person (P2P) electronic payments are a much sought after option. Listening to their clients, seven major U.S. banks are launching a mobile P2P Instant Payment Option that is expected to compete with PayPal and Facebook.
Normally a P2P transaction can take one to three days to complete. This new option makes the transaction instant and will work for people banking at other institutions than the person paying. This is big news for banks, who are losing customers that are tired of paying fees, to other free services such as those PayPal and Facebook offer.
ClearXchange, the digital system the payments go through, was recently acquired by Early Warning. An article in Winston-Salem Journal dated March 20, 2016, quoted Paul Finch, chief executive of Early Warning as saying, "Consumers, businesses, and government agencies will now be able to seamlessly send and receive payments with unparalleled speed, accuracy and security through our network."
Banks who plan to use instant P2P payments include Wells Fargo, U.S. Bancorp, and Capital One Financial Corp. and will be available to all banks. Payments can take place with just a phone number or email address, and the company also offers P2P check depositing services.
Since the electronic payments industry is evolving so quickly, services like PayPal are go to's for millennials and other age groups. Banks need to continue to compete with such services in order to keep clients and continue along a profitable trajectory.
