FIS Enters Real-Time Person-to-Person Payments Arena with People Pay Service

Fidelity National Information Services Inc. (FIS) on Monday rolled out its entry in the person-to-person payments sweepstakes and, as with other providers in recent months, its service offers real-time settlement. Indeed, People Pay—the name FIS has given its new P2P service—is built on the PayNet network the company introduced last fall to offer real-time settlement for various non-card payments.

Using PayNet, People Pay can process transactions through NYCE, the Secaucus, N.J.-based electronic funds transfer switch owned by FIS that links financial institutions including those that aren’t otherwise FIS clients. It can also rely on core-banking connections in cases where the banks involved are FIS clients. Users send payments through their bank’s online-banking system using the recipient’s e-mail address or mobile-phone number.

Five client institutions were in a pilot and are now moving into production, FIS says, adding that while People Pay is the name it has given the service, each institution will brand the product in its own way.

The key to consumer adoption is faster settlement, FIS says. Currently, P2P services mostly rely on the automated clearing house network, which offers next-day settlement. “The real-time [processing] piece is very important,” Nancy Langer, division executive for e-payments at Jacksonville, Fla.-based FIS, tells Digital Transactions News. “Most [P2P] solutions are [based on] the ACH.”

Equally important for adoption will be a mobile version of People Pay that will appear in May or June, Langer says. Some time in the latter half of the year, presumably before the holiday shopping season, a virtual gift card version of People Pay is likely to emerge, as well, to work on mobile devices. FIS has found growing demand for a P2P application that would allow a user to fund and send a downloadable gift code from a merchant to another person as a gift, Langer says. “Gen Y users like this better than a gift card,” she says. “Once [People Pay] is on a mobile device, that [gift code] will be one of the most meaningful use cases. It’s a big priority.”

FIS’s People Pay entry is the latest in a P2P market that has been revived in part by the promise of faster payments. Bank of America Corp., JPMorgan Chase & Co., and Wells Fargo & Co. last year launched clearXchange, a P2P network that switches funds among customers of the three sponsor banks. And FIS rival Fiserv Inc. offers Popmoney, a service Fiserv acquired in 2011 and combined with a P2P service it had started called Zashpay. ClearXchange and Popmoney reach roughly three-quarters of all U.S. online banking users, according to estimates that emerged last year. For credit unions, processor Co-Op Financial Services last month unveiled a digital wallet called Sprig that includes real-time P2P capablity.

At the same time, technology players have been pushing to speed up transaction times, stressing the need for real-time or near-real-time settlement to appeal to younger mobile users accustomed to instant results. A key player in this movement is Dwolla Inc., a Des Moines, Iowa-based startup that last year introduced a service called FiSync that allows users to instantly fund Dwolla accounts from their bank accounts.

Experts see potential in People Pay because of FIS’s backing but question whether its P2P orientation will prove to be a lucrative market and whether banks will respond in significant numbers. “It’s an optional service for financial institutions, they don’t have to do it,” says George Peabody, an independent payments analyst. “It’s a classic problem for any network provider, can I get issuers to participate? These are your distribution partners essentially.”

Aaron McPherson, practice director for financial services at IDC Financial Insights, argues FIS will ultimately have to add a point-of-sale capability to build adoption and volume. “Domestic P2P is pretty much friends and family, but if you can use it for brick-and-mortar [retail] payments it becomes more interesting,” he says.

Langer will not go into detail about FIS’s pricing to banks initiating transactions, but says there will be a setup fee and likely either a transaction fee or user fee. Pricing to consumers for People Pay will be left to individual financial institutions, though Langer says most are considering not charging.