Banking by cellphone just got easier
Three major U.S. banks have rolled out a new person-to-person payment system that makes transferring money very simple.
If you've ever transferred money out of your bank account, you know the hassle: Fill in the routing number and the account number. Wait, which is which? So many numbers, so many chances to screw up.
That's no longer a problem for customers of three very large U.S. banks. Bank of America, Wells Fargo and JPMorgan Chase have partnered on a new system -- clearXchange -- that allows customers to send money via cellphone or email.
"All our customers need to know is the email address or mobile number of a friend or family member and we will take care of the rest utilizing clearXchange," Wells Fargo executive vice president Mike Kennedy said. "We are talking about ... using a mobile device to send your brother the $100 you may owe him, straight to his bank account," he told The Street.
How big is this? "This feels kind of like it did when credit cards started taking market share from checks," Sandler O'Neill analyst Jeff Harte told The Street.
Besides ease of use for consumers, there are other advantages to the banks in doing this:
Take that, PayPal. "The service is a direct threat to PayPal, which dominates the market for online, electronic payments with nearly 100 million active users," The Associated Press reports.
Banks "are essentially trying to regain the ground that they've lost ... and time that they've lost and wasted over the past 10 years by not really competing with PayPal," Gwenn Bezard, a research director with Aite Group LLC, told American Banker.
Eventually it could be a source of revenue, something banks are anxious for since Congress and the Fed have limited their ability to bleed Americans with overdraft fees and, in the near future, debit card swipe fees.
Right now, the three banks aren't charging customers for the service, but that will likely change as other banks pay a fee to join clearXchange. Besides, when have you known a major bank to pass up an opportunity to impose a fee, particularly when another revenue source shuts down? (Remember free checking?)
Meanwhile, there are new developments on the point-of-sale technology front. ConsumerAffairs.com reports:
… Google is reportedly teaming with Citibank, MasterCard and Sprint to provide a mobile payment service of its own. Google has scheduled a press event in New York Thursday, at which time it is widely expected to announce a service that will allow consumers to pay for purchases using their Android smartphones.
It appears that those who are still cutting checks (raise your hands!) are closer to joining the dinosaurs.
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Only the naive will use phones and email for bank access. Banks tout their site security, BUT it's the trip from your device to the bank that is about as secure as a sieve. Phones are especially vulnerable. Unless there is 128 bit encryption there are leaks. Even then spyware, Trojans, and other malware render any electrical device suspect. I only use a corded phone to access my accounts. Cordless phone broadcast every transaction.
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