This morning’s American Banker (subscription required) has a story written by Chris Costanzo about the Canadian banks and their experiences to date using a person-to-person money transfer service originally developed by Certapay. Certapay is now jointly owned by the top five major Canadian banks.
The article reports that the Canadian banks have been underwhelmed by the uptake of the service for person-to-person payments. Further analysis has revealed that the typical Canadian consumer writes about 20 checks each year to other individuals — and the banks have concluded that that just isn’t enough to get consumer behavior to shift away from just picking up the paper checkbook.
As a result, Costanzo reports that the Canadian banks are now thinking that the better market opportunity is to use the service as a new way for the consumer to pay businesses — e.g., pushing money to the business rather than paying by credit card, etc. But apparently this service isn’t going to be available until next summer.
Curiously, the banks are also charging their customers a $C 1.50 fee when they send money using the service. I’m only a sample of one, but that fee feels excessive to me as a consumer — given that it’s quite a bit more than the cost of a check, the envelope, a stamp, etc! Plus the banks have the associated costs of capturing/posting the check, etc. Seems like they’d want to encourage me to use the electronic payment alternative. Maybe this fee also has something to do with the poor consumer uptake of the service?
With respect to the plans for person-to-business payments, why would I pay a business using this service — and incur a $1.50 fee to my bank for the privilege of doing so — unless I had no other option? Presumably, the banks will modify their pricing to extract value from the merchants rather than charging their customers?
I remember someone in the telecommunications industry commenting a long time ago that if the phone companies were in the business of selling sushi, they’d market it as “cold, dead fish”. Let’s hope the Canadian banks can do a better job marketing a more convenient, lower cost option to their customers!