24 July 2016
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US Bank and Bank of America switch on real-time mobile P2P

09 March 2016  |  8274 views  |  2 hipster suit with phone

US Bank and Bank of America have become the first banks to offer real-time peer-to-peer money transfers to consumer mobile phones over the clearXchange network.

ClearXchange, operated by the bank-backed Early Warning consortium, acts as a clearing house for person-to-person online payments transfer, enabling customers to send funds directly from their bank accounts to the recipients' using only an email address or mobile phone number. The platform is owned by Bank of America, JPMorgan, Wells Fargo, Capital One and US Bank, making it open to more than 100 million people.

US Bank and Bank of America are the first to go live on the system, with other consortium members expected to follow later this year. Between them, the early adopters have a combined reach of nearly 22 million mobile banking customers in the US.

With young Americans increasingly turning away from cash and cheques, the P2P payments market is seen as a huge, fast-growing market. Individuals transferred some $200 billion to one another using mobile phones and computers last year, according to Javelin Strategy & Research.

Venmo, the service acquired by PayPal when it bought Braintree in 2013, has established itself as the market leader, handling handled $7.5 billion of person-to-person payments last year, but other tech giants, including Google, Facebook and Square are all competing.

In offering immediate payments, the bank-backed competitor has a clear edge over its rivals, which currently take up to three days to clear funds using legacy banking payment rails. In the battle to win hearts and minds, US banks have a six-month window to press home their advantage before Nacha switches over to same day payments later this year.

They may also have another ace up their sleeve, however, if rumours of a potential partnership with Apple Pay come good.

Comments: (2)

Gerard Hergenroeder
Gerard Hergenroeder - IBM - New York | 09 March, 2016, 16:44

Why did take so long since clearXchange has been around for a long time? The U.S. banking system needs to accelerate its innovation agenda. Congratulations to both Bank of America and USBank for taking the first step which was not easy.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 09 March, 2016, 17:40

As far as I know, the US ACH *may* implement same-day settlement later this year. While The Clearing House (TCH) is planning to implement realtime payments later this year, Venmo runs on ACH and will only be able to cut down processing time from 3 days to same day, but not realtime. On a side note, Chase's QuickPay processed $2B in January 2016, double of what Venmo did (Source: http://qz.com/625259/banks-are-teaming-up-to-launch-a-venmo-killer/)

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