Money In The Bank? A look at CashEdge’s POPmoney

by Carol Coye Benson on June 25, 2009

in Carol Coye Benson, Mobile Banking & Payments, P2P

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Editors Note: Glenbrook, along with the rest of the payments industry, has been watching developments in mobile payments closely.  Our partner Carol Coye Benson profiles the CashEdge POPmoney product today.  She has also taken a look at Boku, Canada’s Zoompass, Zong, Billing Revolution, and Blaze Mobile. [UPDATE Aug 6th: Be sure to check out Carol’s latest installment on Obopay, one of the original mobile payment pioneers.]


There are a lot of mobile payments companies – and a lot of prepaid/mobile combo products – that are focusing on person to person, or P2P payments.  It’s not surprising – this is a payment domain still dominated by cash and check. Introducing a new P2P product also avoids all the messy complexities of terminals and the point of sale.  Of course, the challenge in this domain has always been the business case – particularly for domestic P2P transfers.  There hasn’t been a lot of evidence of consumer interest in paying to pay – or receive – payments from friends and family.

So it was particularly interesting to see an important incumbent in the P2P arena, CashEdge, step into the mobile P2P arena with their new product, POPmoney.  CashEdge is a behind-the-scenes player that supplies banks with services to allow their customers to move money electronically.  The Company  started by enabling transfers from a customer’s account at one bank to the same customer’s account at another bank – so called “me-to-me” transfers.  They have since expanded the offering to handle third party transactions (“me-to-you”). Several hundred banks are currently their clients, including seven of the largest ten banks.  CashEdge transferred over $50 billion for banks in 2008.

The POPmoney product, which again will be offered to banks, is, from their viewpoint, simply a logical extension of their platform.  I spoke with Neil Platt, SVP & General Manager, US Banking, about the launch.

Understanding how POPmoney works means understanding their basic platform.  CashEdge effects the P2P transfers by “doubling up” – doing two payments transactions: one an ACH debit to the sending consumer’s account, and one an ACH credit to the receiving bank account.  (This doubling up is common with new payments products – for example, PayPal or Decoupled Debit). As we all know, the ACH debit half is the tricky piece of this transaction.  An originator of an ACH “ad hoc” consumer debit is exposed to both fraud risk and NSF (insufficient funds) risk.  There are several components to the fraud risk.  CashEdge is nicely covered from the first major source of fraud: a consumer giving another consumer’s bank account information.  Since the CashEdge transaction starts at the consumer’s bank, that bank in effect can vouch that an account belongs to the consumer in question.   There are more complicated fraud schemes which can still be perpetuated, and the management of this is part of what CashEdge does for the banks.

Interestingly, the consumer sending bank does not vouch to CashEdge for good funds in the consumer account (you’d think they could, but maybe it is too complex to hook into the debit authorization infrastructure of the bank).  CashEdge offers options on its product to deal with this: one is a transfer which is not good-funds-guaranteed (in other words, CashEdge can reverse it) and one which is guaranteed, but where the second leg of the transaction (the ACH credit to the receiving bank) is delayed for a few days in order to manage that risk.

So, back to mobile. How will banks offer this to consumers?  Platt believes that most will make it a function of their mobile banking offerings.  Some may create a stand-alone product.  The very attractive feature is that the only thing the sending consumer needs to know is the email address or the mobile phone number of the recipient.  The recipient will get an email or text message along the lines of “you’ve received funds from (name),” and will direct them to go to their financial institution or the hub to collect the payment.  (There will be options for consumers who have accounts at banks who participate in the service, and also for consumers who don’t.)

Consumer pricing, of course, will be left up to the bank.  Experience tells us that it is unlikely that most consumers will pay for this – but there are people that think that “mobile changes everything”, and in a mode of spontaneous, small-dollar purchases (can you say ring tone, anyone?) agreeing to pay some small transaction fee to send money might yet work.

I think it’s likely that banks won’t be able to charge explicitly for this service, and will end up incorporating it into their basic account package.  (That’s what happened to me, when I lived recently in Canada.  The Interact P2P transfer service was bundled – up to X transactions per month – into my overall Bank of Montreal account package.)  So why would a smart bank provide consumers with yet another service with no incremental revenue?  It could be that those smart bankers are getting very nervous about the non-bank mobile payments offerings – and think letting consumers send money out of the bank as  a good way of keeping money in the bank over the long run!


3 Responses to “Money In The Bank? A look at CashEdge’s POPmoney”

  1. pwb says:

    This is interesting but is going to require some know-how in how to get consumer traction which I’m not sure is CashEdge’s strength.

  2. AAT says:

    I agree with pwb, we are in this sector for 5 years and feel that the business model for this service has to be clustered and disbursed rather then single company. There is business conituity risks and adoption lag.

  3. Gail Wiegner says:


    February 1st, 2010 by gwiegner

    The next big thing in US banking will be mobile person-to-person (P2P) money transfers. You will be able to sign up for this service through a bank or similar provider. The bank’s person-to-person payment system will be integrated with your regular online banking, and funds can be emailed and then debited from your account. The recipient will get the cash deposited directly into an account or have it posted to an existing credit card or a prepaid card.

    What if you borrowed $50 from a friend last week, or your child at college needs quick cash, or you need to pay the babysitter, or pay your dining partner your share of the bill? All you need is their email address or cell number and presto. All in real time too. No more hauling off to the ATM to get cash, or writing a check and mailing it snail mail. While the older generations still may walk to the supermarket to pay their utility bills, the younger set has already fully migrated to the next frontier of on-line shopping and e-banking. Having used on-line banking for over a decade now, consumers can enjoy the convenience of managing their money within the context of their existing and trusted banking relationships.

    While the banks are just waking up to the potential of person-to-person payments, Paypal is already offering a service that allows users to make transfers over a cell phone, and may well gain the most critical mass in this new technology. But financial institutions easily can extend their banking services without having to build major infrastructure. In the end, whoever can make mobile payments the simplest, and also design a good marketing strategy, will capitalize on this opportunity, charging possibly twenty-five cents per transaction.

    With regards to security, consumers can rely on the personal payment service through their participating financial institution, who has already established a secure payment processing system. This will eliminate the need to share account information with a third party and result in both improved security and greater convenience.

    Another benefit will allow consumers to leave money in their bank accounts longer. While the current interest rates are at an all-time low, better to have your money in the bank than in your pocket, or paying up to 26% on your credit card balance.

    Like cell phones eliminated the need to wear a watch, they will now eliminate the need to carry a wallet.

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