In an age where we have everything in our pocket, or within reach, it’s both understandable and amazing how fragmented the peer-to-peer mobile payments space has become. With numerous banks and third-party providers crowding the market, and seemingly little partnership across the board, individuals use different providers, and others have become so confused about the offerings and process that they’ve either tuned out or chosen to operate on a cash-only basis.
Here’s what I do and don’t like about my favorite platforms for sending and receiving money. I’ve ranked the services from my most-to-least preferred:
- ClearXchange (Wells Fargo, Bank of America, Chase Bank):
- Likes: Free transfers using only email or telephone number between all Wells Fargo, B of A, and Chase consumer banking customers. Most everyone has one of these banks. Native platform- it’s the bank! Integrated with online banking, no need to provide banking information elsewhere.
- Dislikes: Given the press and novelty of newer offerings, like Square Cash, peers don’t tend to know about, or utilize, bank transfers.
- Square Cash:
- Likes: Easy! Send a quick email or use the mobile app to transfer money. Offered by a reputable, trust worthy company (Square, Inc.).
- Dislikes: Setup process to link Square to your bank.
- Likes: One of the most recognized and trusted companies for e-commerce. Everyone’s probably already got an account! Intuitive mobile app.
- Dislikes: Even after all these years, it’s still important to train your friends to specify “Sending money to friends or family” to avoid PayPal fees. Money sits in your PayPal account until you manually transfer it to your bank.
- Venmo (now owned by eBay):
- Likes: Venmo Touch, Pay Nearby Friends! More and more people are registering for Venmo everyday- mobile push notifications from my friends say it’s so! Venmo’s adoption into the eBay family, and coupling with the Braintree payments platform, will make it more prevalent.
- Dislikes: Debit card users “at smaller banks” are charged a fee of 3%, as if they were paying by credit card. Money sits in your Venmo account until you manually “Cash Out” to your bank.
- Likes: Reputable company (PopMoney is owned by Fiserv). Quick and easy process to send money. Settings allow you to automatically deposit received money into your bank account.
- Dislikes: Often pay a $1 fee to send money. People are less familiar with PopMoney, making it a less attractive option.
- Patelco Member-to-Member Transfers:
- Likes: When transferring money to someone, they can have you put the money directly towards their credit card balance, or deposit it into one of their bank accounts, potentially reducing a step on the receiving end.
- Dislikes: You can’t setup the service from your mobile device, and there’s a couple-day waiting period for the setup to take effect. Limited to Patelco Members.
One option I have yet to use, since I’m already leveraging the above, is Dwolla. Here’s what I’ve come to learn:
- Likes: Free for transfers under $10, only $0.25 for anything pricier. Includes payment to vendors, not solely peer-to-peer.
- Dislikes: I haven’t used Dwolla because there are already a plethora of free options out there for peer-to-peer transfers, and I’ve yet to visit a merchant who was touting Dwolla for payment.
I have seen pilot programs like Wells Fargo Labs’ SettleUp Service (a social ‘IOU’ and ‘pay me back’ platform) emerge and disappear due to lack of awareness and demand. Today, we should hope that mainstream platforms like ClearXchange would receive wide press coverage and overwhelming adoption, bringing more users to their platform. After all, the service is free, and most American households use these at least one of these three banks.
As someone who spent over a decade in the banking industry, I am still intrigued by the idea that, in the very near future, the mechanism I choose to send money may become transparent to a recipient. Until then, at least we’ve got plenty of choice, and plenty of opportunity to sway those around us to use our platforms of choice. The downsides of that fragmentation, of course, are you’re spreading your banking information all over the place, and having to use and manage more than one platform.
For the convenience factor and price point (most are free), I’m willing to deal with the fragmentation for a while. And I’ll keep my fingers crossed that we move towards a more unified system!