Early Warning Services recently announced that it had added Capital One, Chase, and Wells Fargo to the list of banks using the clearXchange network to send and receive P2P payments in real time. Bank of America and U.S. Bank had previously announced their support.

It is great to finally see some big bank cooperation in this space. Now that the largest banks in the land have come together to make settlement speed a competitive advantage in the P2P space, they must address the complex customer experience and lack of mobile support that continues to drive customers in droves to competing functionality from PayPal and Venmo. 

Less than half of the top 30 banks in the U.S. currently offer P2P payments through mobile banking today. While just 33% of mobile device owners have used P2P in the past 12 months (see chart below), Javelin predicts that this will grow to more than 50% in the next several years.  

Like Tom Sawyer selling Huck Finn on the idea that painting the fence is fun, banks have convinced millions of customers of the value that P2P payments can provide. Once enrolled in the current online functionality, however, many bank customers have discovered that the setup process can be tedious, the settlement times slow, and the need for both sender and recipient to register for the same service inconvenient, at best. 

The clearXchange bank-to-bank connections will meet customers’ “need for speed” and eliminate the requirement that both sender and recipient be enrolled in the same service. The fact remains, though, that most bank-sponsored P2P offerings today are far from delivering on the customer experience expectations being set by third-party providers and contactless mobile wallet payments.

Chase CEO Jamie Dimon recently alluded to a planned launch of a standalone Chase QuickPay P2P app, and clearXchange plans to rebrand the network and launch an app of its own in 2017. This next generation of bank-branded mobile P2P functionality must greatly streamline the process of sending and receiving funds through a smartphone.

Consumer expectations for P2P payments are evolving rapidly, and the real-time advantage made possible through clearXchange may be short lived. PayPal’s announced agreement last week with Visa will enable PayPal and Venmo customers to instantly move money to and from Visa-issued debit cards though the Visa Direct network, and Square Cash plans to leverage Apple iMessage enhancements to enable P2P payments to be initiated through a text message or even via Siri. More than 650 million Chinese consumers already enjoy similar WeChat functionality.

A recent Gallup poll showed that 62% of Americans believe that they will see a cashless society in their lifetimes. We may be on the way, but so far it hasn't been much fun.

Author

About Emmett Higdon

Emmett helps clients better understand and leverage the pivotal role that mobile technology plays in how consumers manage their financial accounts. As banking functionality seamlessly integrates with every aspect of consumers’ daily lives, Emmett works with banks to ensure that their brands remain prominent throughout. He introduced Javelin’s Mobile Experience Review to provide clients with deeper, actionable insight into how consumers adopt and use mobile banking apps, connected devices, and emerging features such as voice control, personal assistants, and biometric authentication.

With more than 20 years’ experience in online and mobile financial services, Emmett combines his analytic expertise with client-side experience and a keen understanding of consumer expectations to help clients craft digital banking adoption and engagement strategies.

Before joining Javelin, Emmett was a senior director of mobile strategy for TIAA-CREF and also founded Prizm Strategy, a mobile-payment and customer-experience consultancy. Previously he was an e-business and channel strategy analyst with Forrester Research and spent eight years as a vice president of payments and transfers for Citibank.

Emmett holds an MBA in marketing from Loyola University and a bachelor’s degree in the Writing Seminars from Johns Hopkins University.

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