clearXchange just got a new owner/member.
U.S. Bank – lead bank of U.S. Bancorp (and the fifth largest bank in the United States) – joins Wells Fargo, JPMC, Bank of America and Capital One as one of the owner-members of the clearXchange digital payments network.
This makes clearXchange the largest bank-focused P2P network reaching 100 million online banking customers and 50 million mobile customers.
“We formed clearXchange based on customer feedback,” clearXchange CEO Mike Kennedy told MPD CEO Karen Webster shortly before the news was announced. “Customers say how much they liked their loan and deposit products; how much they liked the online and mobile balance checking and paying their bills online. What they also wanted to know was why, if they are able to pay AT&T with their bank account, they couldn’t also pay their gardener or their friend the same way.”
Moreover, noted Kennedy, in the era of the cyber breach, consumers feel comfortable with their banks, as they tend to identify them with safety and security of funds. Ability to offer customers something secure and easy to access from a familiar point is helpful both to customers, but also clearXchange’s banking partners.
The significance of U.S. Bank’s decision to participate as both a member and an owner means that they, along with Wells Fargo, BoA, JPMC and Capital One, have contributed capital and jointly own the network. U.S. Bank brings the number of owners to five. But, Kennedy said, “any bank that joins will be a member and gets all the benefits of the network which includes access to all the APIs, all the functionality and everything else in the network.”
clearXchange was established as “a digital payments company to transition away from expensive and inefficient methods like cash and check, Kennedy told Webster, with a focus on P2P payments. In the last year, clearXchange has expanded that focus to accommodate the more than $3 trillion worth of business and government disbursements to consumers, mostly made by checks.
“We’ve created with our network a solution that works with banks and wholesale treasury management groups to sell to their corporate and government customers this ability to move from the expensive and inefficient checks to digital disbursement capability,” Kennedy remarked. Bank of America’s Digital Disbursements product, which enables government payments to be made directly to a consumer’s bank account, leverages the clearXchange network.
And, notes Kennedy, in some sense that is just the beginning. Kennedy told Webster as they’ve become more established, they’ve also been able to expand the options palette for their partners and their customers, most particularly, where they’ve already made important inroads and where there is a consumer “pain point.”
“We think it’s important for us to go after the lowest hanging fruit. For us that started with P2P then going to business to consumer disbursement and government to consumer disbursement. From there, we are evaluating all the other options out there: Where are the pain points that consumers or businesses are feeling and what are we in a position to alleviate so that we can drive things for the benefit of both the consumers, the businesses and our banks?”
Though he also noted that clearXchange’s vision is expansive.
“We definitely see ourselves as a digital payments company, not just a P2P payments company.”
Whether that includes consumer to merchant or business to business, remains to be seen.