Popmoney Outperforms In P2P Payments

by on Mar 21, 2013

This article originally appeared in the Spring 2013 Issue of Consulting Insights. To learn more about our Bank Website Audit services, click here or contact Erica Bensousson at 212-832-2002 x-112 or ebensousson@corporateinsight.com.

One of the many services Corporate Insight provides to clients is the Bank Website Audit. First introduced in 2005, the Audit allows us to benchmark a client’s website against the overall online banking industry, revealing their relative strengths and weaknesses, identifying best practices and providing actionable recommendations to help the client improve their site.

The Audit rates bank websites on over 250 attributes across seven categories, using our latest survey data to weight criteria by their importance to actual users. As such, our Audits will change over time as client needs and expectations evolve.

P2P Added to Audit Framework
Our latest Bank Website Audit took its first in-depth look at person-to-person (P2P) payment services, which have proliferated among the bank websites we track. Currently 12 of the 19 firms we cover offer a system for sending money to another person without having to know the recipient’s detailed account information. In most cases, customers can log into online banking and execute the transaction simply using an email address or phone number. The service allows bank customers to send money electronically when they want to split a dinner bill, pay rent or reimburse a friend. It also provides an excellent alternative to third-party P2P payment systems such as PayPal, where customers are more likely to incur transaction fees.

Our Audit analysis of P2P payments evaluated all aspects of how the service is presented and transactions are executed, including how to schedule a payment, add a recipient and view or modify pending transactions. We also evaluated the payment interface and how easily clients can access the service via the bank website.

How Do Services Differ?
P2P payments present a new technical challenge for financial services firms. When it comes to developing P2P payment tools, six of the 12 firms whose services we reviewed – Ally Bank, Citibank, Citizens Bank, Fifth Third, PNC and SunTrust – use Fiserv’s Popmoney to power their P2P capabilities. Other banks turn to different providers or have developed their own in-house platforms. We observed variations when it came to the functionality and fee structures of the 12 banks – surprisingly, even among the Popmoney partners.

While all banks allow clients to send money to another party, only three– Chase, SunTrust, and Citizens Bank – allow clients to request money as well. Clients can input due dates for a payment request and have email reminders sent on a specified date.  These capabilities give customers and small business owners the most control, essentially implementing a system for invoicing and collecting funds electronically instead of via cash or checks.

Fifth Third stands out for providing clients with a choice of next-day delivery or the standard three-day delivery time frame. Additionally, some Popmoney-powered services allow customers to import contacts using their Yahoo, Hotmail or Gmail address books instead of re-entering a phone number or email address manually. They can also offer e-greetings as part of the payment notification email.

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Banks seem to avoid assessing fees for P2P payments as they want to encourage clients to adopt this service instead of looking for outside electronic payment alternatives. However, some firms charge a small fee for enhanced services, such as customized e-greeting backgrounds. SunTrust and Citizens Bank charge $0.99 to include unique email backgrounds; Ally Bank, Fifth Third and PNC offer this feature free of charge.

Top Performers in P2P
After analyzing the individual capabilities of each firm, the Popmoney platform emerged as the clear leader in P2P payments, with its six partner banks ranking highest in our Audit scoring. The process for sending money is simple and quick (all payment details are entered in a single step), and customers have access to ample help tools along the way. They can also keep track of their payments by assigning them custom descriptions and categories. The platform stands out for incorporating components that typically lie outside the scope of traditional banking transactions, including the ability to import email contacts and the use of e-greeting backgrounds. The top scores went to SunTrust and Citizens Bank, both of which offer the ability to request money from contacts as well as send payments.

While clients do not value P2P as highly or use it as frequently as core features like account balances and activity, it has become an important component of a firm’s online banking offering. P2P presents a new opportunity for banks to improve client retention, increase wallet share  and potentially generate revenue if clients are willing to pay for this service down the line.