Why it’s so hard to transfer money to your friends – your money

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Even PayPal, an object of contempt and fear of banks in its infancy, has embarked on the game of banking partnerships and is working with a few hundred of them, including USAA, to offer a similar service. With his offer, recipients end up with money in a PayPal account, and they can transfer it to their checking account if they wish. “We really think people are going to do this from where they’re most comfortable and that’s probably where they’ll have their direct deposit relationship,” said Dan Schatt, general manager of financial innovations at PayPal.

Today’s big banks aren’t as fearful of PayPal as they are with iTunes, Google, or Facebook. Considering the large number of young users of these services, it is possible that one of them is trying to create a platform for easy person-to-person payments. This is perhaps the main reason clearXchange, the Bank of America, Chase and Wells Fargo joint venture, came into being.

These three companies claim to have about half of all online and mobile banking customers, so they can certainly weigh in with their full weight. The clearXchange offering hasn’t meant much so far, however, as users in the test markets cannot even send money to banks outside the joint venture yet, which customers ING Direct have been able to do this for over five years. (In fairness, customers of these three banks have other services the bank offers to transfer money to friends and family, including Chase’s QuickPay service, which he advertised during the Super Bowl.)

All of these interoperability issues aside, however, Peer-to-Peer payment services still have usability issues. Recipients may not know their bank account information when they go out to dinner or at work, or they may be hesitant to enter their bank information on an unknown site.

Additionally, people who don’t yet have a PayPal account may be annoyed if asked to create one for a birthday present or money a friend owes them, or they may just prefer a check. rather than dealing with remember to log into PayPal to transfer the money to their checking account.

“The consumer has yet to think about it,” said Mr. Higdon, the former Citi banker. “They should get a text message and should just have to say yes or no and then the money is there.” Until we reach that point, we are not going to see widespread consumer adoption. “

One thing that could get consumers on board faster is for money to be transferred instantly from one bank account to another at another bank. But because these payments travel along the same electronic tracks as checks, it can still take a few days. It is deeply irritating to people who think they are putting money back on the table with a cell phone only to find that the money is in fact stuck in a decades-old intrabank system that is in desperate need of repair. update.

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