Splitting the bill for those pizzas you shared with your buddies or that utility bill that is suddenly due is going to get easier and faster even if you don’t all use the same bank.
JPMorgan Chase, Wells Fargo and other big banks are upgrading their online payment services to let customers make instant transfers of money to others who bank elsewhere, often at no cost.
The move comes as traditional banks face pressure from payment companies like Venmo and Square Cash that offer ways to split the bill.
Banks developed online services that allow their customers to send money to anyone with a phone number or email address several years ago. But the services were considered overly complicated. Until last year, bank customers could only send money to another customer at the same bank. The only option bank customers often had to send money instantly to another person was a wire transfer, which can cost upward of $30 at a branch, or to use a service like Western Union, which also charges a fee.
When the option to send money to person at a different bank became available, the service would take upward of three days to complete. Silicon Valley startups Venmo and Square Cash, on the other hand, promised person-to-person transfers that were open to anyone with a debit card and would be completed in as little as one business day.
The banks don’t want to lose more customers and are trying to top Silicon Valley.
“This is what our customers have been asking for,” said Jason Alexander, head of digital platforms for Chase, in an interview.
Chase, the nation’s largest bank by assets and the largest bank operator of person-to-person payment services, is rolling out its upgrade to Chase QuickPay next month. Wells Fargo is launching its service in July. Bank of America customers have had the ability since March, but only between them and U.S. Bank — they were the only two with the necessary software upgrades at the time. Capital One plans to roll out real-time transfers later this year, a spokeswoman said.
The instant payments between these big banks come with a limitation: the instant payments will only occur between banks on the same network, called clearXchange. The network includes Chase, Wells Fargo, BofA and U.S. Bank, as well as Capital One and Colorado-based FirstBank. That network represents 60 percent of all U.S. mobile banking customers, according to a Chase spokesman.
ClearXchange is expected to grow in the coming years, said Gareth Gaston with U.S. Bank.
“It’s about connecting all the banks together to make our customers’ lives a little simpler,” Gaston said.