Sending someone money via a mobile device is easy with clearXchange. (Photo Credit: CC BY/Gunnar Bothner-By/Flickr)

Bank of America, JPMorgan Chase and Wells Fargo have banded together to challenge PayPal for online payment service superiority, reports the Associated Press. A new mobile payments service called clearXchange now makes it easier for consumers to make person-to-person payments via a mobile number or email address. The trio of U.S. banking giants anticipates that clearXchange will eventually replace traditional money transfers entirely.

Lower fees than prepaid debit and eBay’s PayPal service

Despite the fact that big banks originated the cavalcade of account fees that customers have begrudgingly paid for years, Bank of America, JPMorgan Chase and Wells Fargo are marketing the Charlotte, N.C., clearXchange as a much less fee-intensive service than old options like prepaid debit cards and eBay’s PayPal online payment service. Only customers of the three banks will be able to use the person-to-person clearXchange at first, but that will change if the mobile payment service spreads.

JPMorgan’s Director of Mobile, eCommerce and Payments Jack Stephenson told the Associated Press that clearXchange couldn’t be simpler.

“Customers will be able to send and receive money even more quickly and easily,” he said, “with full confidence their funds are in a bank account without worrying about cash, checks or higher-cost services.”

PayPal a big oak to fell

According to eBay, PayPal currently boasts about 100 million active users and processed $27.4 billion in payments in the first quarter of 2011, a 28 percent increase from a year ago. PayPal’s revenue hit $992.3 million, and eBay is confident PayPal’s revenue will soon eclipse that of its parent company on an annual basis.

‘An innovative game-changer’

Wells Fargo Executive Vice President Mike Kennedy told Business Wire that clearXchange’s simplicity will change the mobile payments game.

“This is an innovative game-changer in electronic payments,” he said. “We want our customers to be able to easily send money to anyone without having to establish a new account outside their primary bank. All our customers need to know is the email address or mobile number of a friend or family member and (clearXchange) takes care of the rest.”

Sources

Business Wire

Associated Press

ROAM Data, Inc.’s Rob Stringer on end-to-end encryption

The Square card reader offers personal credit card processing that will compete with Visa's new P2P system. Image: Flickr / cdharrison / CC-BY-SA

For decades, Visa has provided card processing services for businesses as well as credit and debit cards to customers. As of Wednesday, the card company has announced that it will be premiering person-to-person payments. This new service will compete with electronic payment services such as PayPal and Square.

Visa’s new P2P system

The new Visa person-to-person payment system is new only in the U.S. The card processor has offered a system for individuals to transfer payments to one another internationally for years. Now, fronted by services CashEdge and Fiserv, Visa will allow individuals to apply payments to each other’s credit, debit, personal loans, or bank accounts using e-mail addresses or phone numbers. Visa has not yet announced their fee structure of the P2P payment system, though it is likely to be in the range of one to five percent of the transaction amount. The Visa P2P system will also require those using the system to bank with specific institutions.

Visa P2P vs the competition

Though Visa is touting their new P2P system as “revolutionary,” there are several companies offering similar services. PayPal, owned by Ebay, is one of the most popular online payment systems. An average PayPal transaction costs between 5 cents and 3 percent of the transaction amount, depending on the type of payment. PayPal, however, can be clunky to use off-line. Square is a relatively new payment system that processes card payments through a smart phone, and charges between 2 and 3 percent of the transaction amount. Square is proving especially popular for the person-to-person payments market, since it can process just about any type of card, Visa or otherwise.

The increasing cost of payments

In announcing their new P2P payment system, Visa indicated the system would help “eliminate the inefficiencies of cash and checks.” The reality is, though, that cash and checks are the only way that the full amount transferred from person to person stays with the intended recipient. Much like payday loans, using cards to transfer value requires that a fee be paid. These small fees and payments are usually just a few percent — but are also the target of heavy debate. The amount a card issuer can charge in transaction fees is being limited by legislation, and some card issuers are threatening to limit debit card transactions to $50 or less in order to maximize available profit from these transactions.

Sources

Vancouver Sun
The Register
PayPal
Square

Bank of America has cut off WikiLeaks; the number of financial organizations to stop payments to WikiLeaks is growing. Image from WikiMedia Commons.

Bank of America cut off WikiLeaks from receiving any payments from the organization. B of A has joined a host of other companies to do likewise. Some believe that finance companies are doing so ahead of a WikiLeaks release of bank documents in 2011.

WikiLeaks cut off from receiving payment from Bank of America

A host of financial companies have cut off WikiLeaks from receiving payments from those respective organizations, and Bank of America has joined the WikiLeaks denial of cash bandwagon. Just a few days ago, Bank of America announced that it had suspended any payments that were going to the WikiLeaks organization, according to the New York Times, as the company did not handle itself in a manner that B of A felt was in accordance with its corporate values. Other companies have been doing so as well. PayPal, MasterCard and Visa Europe have all refused to handle or process any payments being sent to WikiLeaks over the last couple of weeks, which resulted in directed denial of service, or DDOS attacks on those respective websites.

Backlash could be the motive ahead of bank document release

There is some suspicion that Bank of America cutting off WikiLeaks, and other organizations, has everything to do with a preventative backlash. In an interview given weeks ago with Forbes, Julian Assange, the head of WikiLeaks, announced that he had a lot of information that could “take down” a major American bank. He also said that WikiLeaks had documents from Bank of America specifically, that had come from a hard drive possessed by a former executive.

Assange out on bail

Julian Assange is currently out on bail in England. A lengthy court engagement granted him limited release with strict conditions, while the decision over extradition of Assange is weighed in court. He faces sexual assault charges in Sweden, though it isn’t known how solid the case is.

Sources

New York Times