While many banks have jumped into mobile banking over the past couple of years, few have rushed to offer P2P mobile payments. Fifth Third became an early adopter yesterday when it announced it's working with CashEdge to offer mobile payments to its customers.
"We're trying to find services that make life convenient for customers, and mobile payments are a big piece of that convenience factor," says Larry McClanahan, vice president and director, alternative delivery, Fifth Third Bank, who spoke to Bank Systems & Technology in an interview. "This person-to-person solution will complement our existing payment suite."
In the Popmoney service that the Cincinnati bank will begin using in June, the payor will need to be a Fifth Third customer, the recipient will not. The payor needs only the email address, cell phone number or bank account number of the person he wants to pay from his Fifth Third online banking account or cell phone. If he uses an email address, the recipient receives an email with directions to go to the Popmoney site and selects her bank from the Popmoney list (175 banks use it, including five of the top 20, according to CashEdge) or link her bank account to Popmoney. The process is the same when payor and recipient are using cell phones, except communication takes place through text messages. If the payor has the recipient's bank account information, the money is deposited directly into that account. Payments are settled through the automated clearinghouse network, either overnight or in three days.
McClanahan envisions customers using the mobile payment service to pay babysitters, landlords, and such. "Another example is the soccer or basketball coach who has to collect uniform fees from several players, this is an easy way to facilitate payments for those transactions," he says. "People might also use this for gifts and birthday payments."
It will take six months to get the service up and running at Fifth Third, to complete integrations with CashEdge's service. Some of the bank's online banking web pages will need to be modified and customers will need to be notified of the coming service. McClanahan declined to share what the project will cost.
Fifth Third is not necessarily looking to make money from the new mobile payment service. "It's a part of improving the customer experience," McClanahan says. "It provides services that existing customers want, so we continue to service them and they have no reason to look for other financial institutions, and we provide a service that other financial institutions may not offer, so it's a customer acquisition opportunity as well."