Friday, January 10, 2014

Digital Payback: Sending Money Made Simple

Originally written for eImagine Technology Group and posted at http://thinketg.com/digital-payback-sending-money-made-simple

Introduction
I still remember that first magical moment when I became aware of QuickPay, Chase Bank's person-to-person money transfer system. We had just ordered pizza in a big group and, when it came time for reconciliation, a few people whipped out their mobile phones and were tapping away. When I got a glance at what was going on, I was astonished. It should have been obvious that we could send money attached to a unique identifier (phone number or email address) by now, but the thought had never occurred to me. I knew then that I just had to become a member at Chase so I would have access to this great new technology.

Fast forward a few years and the QuickPay system isn't as exclusive as it was back then. Unfortunately, many of the same drawbacks still exist - transfers between people in the same institution/bank get their money almost instantly in most cases while paying to an "outsider" will make them wait for a few days. Also, larger sums of money (above $250 the last time I checked) can cause further delay on top of that. So, my dream of paying child support monthly through quick pay was dashed pretty quickly just due to timing (as well as a speedy payback on some plane tickets a friend purchased to capture the points).

Drawbacks aside, there are some new players in town and each has a slightly different take on this tested system.

The Players
Square Cash (https://square.com/cash)
Fees: None
Square has gained a lot of attention by entering the world of mobile credit card processing. Their small head phone dongle and app combination significantly changed the way many small businesses operated and took in revenue. It should be no real surprise that they are impacting the person-to-person (p2p) payment sector given the experience they bring to the table from their more notable endeavor.

Square Cash features an easy way to get started: you send an email to another party stating the money you wish to give them and carbon copy (CC) the square cash email system address. When it receives the carbon copy of your email, it parses out the amount you want to send from. The email contents and send you back an email directing you to link your debit card. Once completed, the original recipient receives thee mail you intended and a link is embedded that directs them to link their debit card to receive the funds. It is definitely worth noting that the transaction is free, independent of any one financial institution, and, according to the literature, transactions complete in 1-2 days. I could not locate anything about transaction sizes (limits), but I wouldn't be surprised if there were some restrictions.

Google Wallet (http://www.google.com/wallet/send-money)
Fees: None for bank transfers (ie checking account), 2.9% or $.30 (whichever is greater) or credit/debit card transfers
One of the more recent companies to jump into the foray is Google. You might think this would have been an obvious jump for the company; they have been pushing NFC-based payments at point-of-sale (POS) terminals for a few years now with arguable success. Suddenly, however, they have jumped to making person-to-person (p2p) payments even easier bu allowing you to "attach" cash to an email via the GMail message composition screen.

While this requires you to have both a Google account (who doesn't?) and, subsequently, to verify yourself with Google's Wallet system (add a bank, card, etc to fund/receive with), this is a great addition to their existing email environment. Much like others, you simply put in an email address when composing, click the dollar sign ("$") at the bottom of the composition window to choose how much and from where you wish to fund it, and send. The recipient then receives the email with instruction on how to connect their account info (If they are not already set up) and accept/reject the money. The downside, however, is that if you use a credit/debit card to fund, you pay a 2.9% fee (minimum of $0.30) on the transferred amount. In this, Google does not stack well against the competition.

PayPal (https://www.paypal.com/us/webapps/mpp/transfer-money-online)
Fees: None for bank transfers (ie checking account), 2.9% or $.30 (whichever is greater) or credit/debit card transfers
PayPal is an established company that has experience in payments. It isn't a big leap, then, to do p2p transfers without having "goods" change hands. Much like the other offerings, the send/receive process is linked to email addresses and offers a very easy process for both existing users as well as those new to the PayPal online system a way to get connected.

Much like Google Wallet, PayPal imposes some fees for using debit/credit cards as well as transferring funds outisde the United States, but these are on-part with Google Wallet (2.9%, $0.30 minimum) which means this is likely more of a pass-through to the real financial gateways behind the scenes for both companies.

Chase QuickPay (https://www.chase.com/online-banking/quickpay)
Fees: None
Back to the origins of this story, Chase still has a strong offering in their QuickPay service. When transferring between two Chase accounts, the transfers happen nearly instantaneously. If the transfer includes a non-Chase account (one account MUST be a chase account), it can take a couple of days. There are no fees, though, as noted earlier, amounts that exceed the limit are significantly delayed in my experience. At the time of writing, I could not find documentation of what that limit might be, but experience has indicated that about $200-$250 is the cut-off for fast to not-at-all-fast experiences.

Chase still makes sense - especially if you and your spouse (or whoever) have Chase accounts. That being said, if you are transferring outside out of the "Chase Universe", this is probably not a viable option.

Conclusion
There are a lot of players in this space (way more than I have covered here), so there is a lot of opportunity to mix-and-match services based on the need of the moment. Just be aware of fees and limitations, checking with the individual provider prior to each use as terms have a way of suddenly changing in financial spaces.

Have any other p2p cash transfer services you use frequently? Please feel free to submit them - I am a user after all!
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