Home > Personal Finance > Big Banks Introduce New Person-to-Person Payments

Comments 1 Comment

Watch out, PayPal. Three of the nation’s largest banks announced Wednesday they’ve joined together to offer instant, person-to-person payment. The new venture, called clearXchange, is already offered in Arizona by Wells Fargo, JP Morgan Chase and Bank of America. It will be available nationwide within a year.

“We’re adding one more piece to the menu of bank customers, which already includes branches, ATMs, Internet banking, mobile banking, and now person to person payment,” says Tom Kelly, a spokesman for Chase.

The new system is intended to be simpler to use than PayPal, which does not offer checking accounts, and thus requires people to fund their PayPal account by withdrawing money from accounts at other financial institutions. With clearXchange, the transaction is intended to be smoother, as long as both parties to a transaction have a bank account with one of the three participating banks.

[Article: Visa and AmEx Say “Forget PayPal!”]

To pay someone money using clearXchange, a customer signs into her bank’s website from a computer or smartphone. She enters the other person’s name, email address or cell phone number, and the amount she wants to pay them, according to a press release from the three banks. The recipient receives an email or text that says they have received money, and allows them to choose which account to deposit the money into.

“We want our customers to be able to easily send money to anyone without having to establish a new account outside their primary bank,” Mike Kennedy, head of payments strategy at Wells Fargo, is quoted. “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.”

[Fraud Resource: Free Identity Risk Score and personal risk profile]

Naturally, in an era where email hacks aren’t that uncommon, the new system raises questions of security. According to The New York Times, an identity thief who has compromised somebody’s email account in hopes of intercepting cash would also need to know the person’s online banking credentials. Were someone to successfully access a person’s online banking account, they could potentially send money to their own account, the Times reports. In cases where fraud did occur, bank executives contacted by the Times said the person sending the money would be reimbursed “as soon as possible.”

The banks aren’t ready to talk about the steps they’re taking to secure peoples’ accounts against fraud, but they assure Credit.com that the new system will have protections.

“I can’t speak in detail yet, but obviously security is an important part of what’s going into this,” says Kelly.

Image © Wayne Ruston | Dreamstime.com

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team