First, Visa and PayPal scratched each other’s backs, and industry observers expect it won’t be long until Mastercard and maybe American Express align similarly with PayPal. Then Mastercard announced the purchase of most of U.K. ACH king VocaLink. August 2, Early Warning Services announced that both Visa and MasterCard joined its clearXchange peer-to-peer network.
What will happen next in the maneuvering of card brands gaining major footholds in the world of banking, peer-to-peer payments and ACH?
Consumers love using P2P so that’s where merchants and banks and SaaS are going. Deals in faster and peer-to-peer payments have been hot and heavy lately and payment facilitators can seize the opportunities occupied by heavies Square, PayPal and Facebook. Today’s P2P could be tomorrow’s C2B.
“This is a strong validation of the consumers’ thirst for improving the movement of money, starting with P2P and moving into B2C,” says Steve Blentlinger, CSO and co-founder of processor Payline Data. “Merchants tend to only adopt what consumers demand, and this further proves the rising tide of convenient instantaneous payments. It also underlines the urgency for ISOs and business management solutions SaaS providers not thinking about PayFac to take notice.”
The Early Warning-Visa-Mastercard partnership means participating financial institutions’ customers can send money using a U.S.-issued debit card with a MasterCard or Visa mark. The transactions will use Visa’s and Mastercard’s high-speed Visa Direct and MasterCard Send real-time pathways.
It’s another way banks are trying to counter the disruption of the financial industry by tech companies. News reports say Wells Fargo & Co. will join Chase, Capital One, US Bank and Bank of America as clearXchange P2P clients. The moves enter the banks in the arena with Square Cash, PayPal’s Venmo, and Facebook’s Messenger app P2P payments feature.
Blentlinger says he can envision real-time methods migrating from people-only.
“It is easy to see the coming trend of consumers and merchants adopting these payment rails to improve their commerce and drive sales,” says Blentlinger. “PayPal did this originally with eBay but now there is an opportunity to integrate these solutions into your mobile app and even physical POS. However, the technological and contractual barriers are a challenge as it has traditionally kept this opportunity out of reach for most merchants, especially SMB that are keen to the flat fee payment processing solutions that payment facilitator model enables.
“If you are using a standard merchant account, being able to accept PayPal, Square Cash or even Apple Pay can be overwhelming for most, or seemingly too expensive due to flat fees vs traditional merchant account rates.”