P2P Payments Are Coming, and the Credit Card Companies Won't Like It

BNET:   Why can’t I transfer money directly from my bank account to your account? Wait, let’s try that again…. Why can’t you transfer money directly from your bank account to my account?



Editor's Note: You CAN transfer money directly from one bank account to another.  Our technology allows you to do it in "real-time" and the funds can be sent from any bank card to any bank card.   Want to send "anyone" $100.00? It couldn't be easier...



Step 1: Send an email to the recipient of the $100.00.  To authorize sending the money simply swipe the bank card  you want the funds to originate from and enter your PIN.  



Step 2:  Recipient receives email stating you sent them $100.00.  To authenticate the receipt of the funds, they would simply swipe the bank card they want to put the money on and enter their PIN.



The money transfers "in real-time" from the bank card used to send the money to the bank card used to receive the money.  Not hours later, not the next day, but the very second they complete the swipe and entering of the PIN to securely authorize the transaction.  Recipient could literally go to an ATM and withdraw the $100.00 the moment after completing the transaction.  To the best of my knowledge, there is no other technology that can complete a P2P money transfer in "real-time."  



What's the catch?  You have to have our device to do it.  But why is that a catch?  Our PIN Entry Device provides multiple value-added benefits and is the only PCI 2.0 Certified PIN Entry Device designed for eCommerce in the world.  



Multiple Uses



1.  Instead of "typing" username and passwords into the online banking site, you could securely log-in/authenticate yourself by swiping your bank issued card and your bank issued PIN.  That alone is worth the price of admission, however, it's usefulness is not done there.





2. It can be used for "secure" 3DES DUKPT encrypted online shopping.  Instead of "typing" your Primary Account Number into a box on website, you would use our device to swipe your card which would then replicate the process done at a brick and mortar retailer.  We 3DES encrypt the Track2 data at the mag-head and the PIN is protected by 3DES DUKPT end-to-end encryption. 





3. Then there's Real-time money transfers. (which obviously includes real-time bill pay) Whereas others are limited with their ability to only move "promises" we actually move money.  





In 2009, financial institutions including Bank of America (BAC),Bank of the West, ING Direct and PNC Financial (PNC) rolled out so-called P2P technology that lets customers use the Web or a mobile phone to transfer money from their account to any other account.



That’s big. If the practice takes off, it could fundamentally change the payments business, says Federal Reserve Bank of Bostoneconomist Oz Shy in a new study. It could also eventually break the credit card industry’s grip on consumers and small businesses, which pay high “swipe” fees for handling credit and debit card purchases. Shy writes:

In recent years, many lawsuits have been filed against card associations with respect to their coordination of interchange fees and the implementation of the no-surcharge rule, which prohibits merchants from openly transferring their fees to card users…. It seems that widespread use of online transfers would increase competition and this would eventually reduce the fees imposed by card issuers and card acquirers.

P2P fund transfer services, most notably PayPal, have been around for a decade. For the most part, however, it was technology in search of a market. But the widespread use of online banking and e-commerce is paving the way for greater use of P2P payments.



In 2009, roughly 44 percent of U.S. consumers reported making at least one online P2P fund transfer, up from 27 percent the previous year, according to Javelin Strategy. The payments research firm expects some 60 million American households to use P2P for such transfers by 2014.



There are two general approaches to enabling P2P transfers. At financial companies such as B of A (see here for a demo), ING,Capital One (COF) and Wells Fargo (WFC), customers use an online interface to enter another person’s account and bank routing info. The recipient of the funds then typically gets an email or text message requiring him to verify his account details and to accept the transaction. Other banks, including Bank of the West, First Hawaiian Bank and PNC, use the tech underlying PayPal, which avoids having to transmit banking details.



The big kahuna here would be full-blown mobile P2P transactions. That’s still a ways off, with most such services in the early stages of being deployed and tested. Only five percent of Americans have used a mobile device to send funds to another person, according to Javelin. Here’s what will change that: smart-phones. Industry studies show that iPhones and Blackberry users are far more likely to make a P2P transfer than folks with less advanced devices.  (Editor's Note:  Our device works with any smart phone)



Speaking of, anyone interested in testing a P2P fund transfer (at a low, low price) should contact me by email. I prefer $10s and $20s.



Editor's Note:  Anyone interested in learning more about our Instant P2P Transfer technology can contact me by email.

Tags: Bank, Payment, P2P, Peer To Peer (P2P), Financial Services, Internet,Finance, Alain Sherter

Alain Sherter is an award-winning business journalist who has written for The Deal, MarketWatch and Thomson Financial Media.