This is another sign that banks are in a rush to develop person-to-person payment systems that make it easy for people to send money using a mobile number or email address. Wells Fargo, Bank of America and JPMorgan Chase announced on Wednesday that they have formed a new venture called clearXchange. According to the clearXchange press release:
Customers of the three banks will be able to move funds directly from their existing checking accounts using an email address or mobile number – instead of providing checking account and routing numbers. The clearXchange service will roll out nationally and there are plans over time to expand it to include other financial institutions and endpoints to create a money movement capability across the industry.
According to Felix Salmon in his Reuters blog
For the time being, both the sender and the receiver of the money need to be a customer of one of those three banks, and right now the sender needs to be in Arizona.
Wells Fargo and Bank of America are already testing this service in Arizona. Chase already has a service like this called QuickPay, but apparently they will transform QuickPay into this new one.
Hopefully, this service will be free for customers, but like everything at the mega banks, fees often pop up. This LA Times article mentioned that the service should at least be free as it is tested:
The banks said the new service will be free to customers as it is tested. Bank of America spokeswoman Anne Pace said the banks would later set separate fee structures for the service.
One thing that should help to keep it free is the competition. I just mentioned the recent improvements to ING Direct’s Person2Person Payment service. Two weeks ago FNBO Direct changed its fee structure so that its standard P2P payment service will now be free. FNBO Direct’s service is provided by Popmoney from Cashedge which also provides this service for many banks including Citibank, PNC, US Bank and Bank of the West.
For those who don’t like PayPal, these bank person-to-person payment services are quickly growing. One advantage over PayPal is that you won’t have to worry about setting up an additional account. You just use your bank account. PayPal isn’t standing still. It’s working with banks to integrate its technology. PayPal announced in October 2010 that it has teamed up with USAA Bank.