Digital Transactions Authoritative, insightful and timely information for payments professionals
By Kevin Woodward
@DTPaymentNews
Early Warning Services LLC announced Tuesday that both Visa Inc. and MasterCard Inc. are now part of its clearXchange peer-to-peer network.
The addition of the two largest card brands means customers of participating financial institutions will be able to send money to others using a U.S.-issued debit card bearing a MasterCard or Visa mark.
ClearXchange in 2015 launched its real-time person-to-person payments service relying on online and mobile banking rails. Debit card P2P transactions will now be enabled through the deals announced today.
ClearXchange gains this capability because the transactions will use the brands’ real-time networks: MasterCard Send and Visa Direct. MasterCard expects the real-time aspect to be available later this year or in early 2017.
“Our work with Early Warning is another proof point to our strategic focus on supporting banks’ efforts to provide added-value solutions to their customers, in this instance with seamless and ubiquitous P2P solutions,” Jennifer Rademaker, MasterCard executive vice president of customer delivery in North America, tells Digital Transactions News via email. “MasterCard Send will provide for a faster payments experience for more clearXchange users and expand clearXchange’s overall network reach.”
The importance of adding the clearXchange capability is significant for Visa and MasterCard, says Rick Oglesby, president of AZ Payments Group LLC and a senior analyst for Centennial, Colo.-based Double Diamond Payments Research.
“ClearXchange and Early Warning are at the forefront of faster payments and person-to-person payments, and through these deals Visa and MasterCard have further solidified their role in this emerging space,” Oglesby says in an email to Digital Transactions News. “It extends on Visa’s deal with PayPal, which also included using Visa Direct for person-to-person payments, and Visa Direct and MasterCard Send are already a big part of Square Cash.”
Bank-owned Early Warning acquired bank-developed clearXchange late last year. Banks are zeroing in on P2P payments as a value-added service, especially within their mobile apps. Wells Fargo & Co. anticipates enabling the real-time function for its P2P service—which relies on clearXchange—later this month.
With clearXchange, financial institutions are competing against the likes of Square Cash, Venmo, and Facebook, which offers P2P payments within its Messenger app.
“While these services are and will be competitive, the P2P market is likely to expand significantly due to the increased emphasis placed on it by the banks and networks,” Oglesby says. “That should help all players in the immediate to intermediate terms.”
The card brands’ participation likely will boost their debit card volumes, says Nancy Atkinson, senior analyst at Aite Group, a Boston-based payments consultancy. “They’re looking at increasing their volumes, their visibility, and the use of debit cards for P2P,” Atkinson tells Digital Transactions News.
The payoff for clearXchange is the growing network, she says. “In today’s world you have to bring those initiating a payment with those receiving the payment,” she says.
