Visa recently announced that it plans to take on both PayPal and personal checks by getting into the person-to-person payment game.
Sometime in the near future, (Visa hasn’t announced exactly when) you will be able to use a service called Personal Payments, which will allow you to transfer money to any other person in the world who has a Visa debit card, credit card or prepaid card account.
Another thing we don’t know yet is what sort of fees Visa will include with this service. But I’d be surprised if Visa’s Personal Payments program was completely free.
The Main Street blog questioned whether this could “be the final nail in the coffin for personal checks.”
One of the main reasons individuals still write checks is to make personal payments to each other. For instance – you write a check to pay the babysitter, for your lawn care service, to make an offering at church or pay for your Girl Scout Cookies.
But if a service like this gains widespread acceptance as more and more people start using smartphones, it could quickly become the new convenient way to pay.
Visa is partnering with several major banks to offer the possibility of transferring money directly to and from bank accounts as well.
Basically – your Visa account number will act much like your bank account number and financial institution’s routing number does on personal checks and for direct deposits. However, you wouldn’t have to memorize your credit card number or figure out the other person’s number when it’s time for money to exchange hands.
Instead, people who use the service would only have to know the other individual’s phone number or email address to transfer money electronically. They would then be notified by phone when the transaction is complete.
In a press release released last week announcing the new service, officials with Visa said the company is changing the payment landscape in the U.S.
“For fifty years, Visa has worked to simplify payments at the merchant point of sale; we are now evolving our network capability to make it easier for our account holders to pay one another.”
Besides person-to-person payments, writer Seth Fiegerman with MainStreet.com says it could give small businesses a big boost.
Think about street vendors who don’t have credit card machines and normally only accept checks. With a system like this they could potentially use the service as a “digital cash register.”
Customers with smartphones could send a payment directly to the vendor. It could also make paying for things online a lot easier. Small businesses could even use this option as a way to pay employees or freelance workers.
Feigerman points out yet another everyday situation where Visa’s new service could be useful – the familiar dilemma of splitting the dinner check.
“Rather than having everyone at the table throw in their credit cards to split a check five different ways, friends would have the option to transfer money instantly (via a smartphone app, for example) to one person who covers the whole bill.”
I know a few servers who would give a big thumbs up to that possibility!
Determining whether or not this idea is a good one or a stinker will probably come down to what kind of fees you have to pay. If the current firestorm over debit swipe fees is any indication of what you can expect – the hope that this will be a free service is probably unrealistic.
Visa actually already offers similar services overseas with more than 70 such programs around the world. But this will be the first time a major payment network has launched an idea like this in the U.S. Visa says some financial institutions will begin making the person-to-person payment service available sometime this summer.
It may be another “nail in the coffin” for personal checks, and even for paying with cash…but how quickly will it catch on?
What do you think? Would you use a service like this? What concerns do you have and what other ways could it be useful?
Image Credit: catheroo (cat edens) and Josh Kenzer
+Kasey Steinbrinck honed his writing skills as a TV producer and newspaper reporter. He now blogs on personal finance and the economy for Check Advantage. Visit the site today to find cheap personal and business checks including Quicken Checks and Nature and Wildlife Checks. Contact Kasey to request free content for your blog or website.
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Looks good. I think everything these days are getting easier and easier as everyone get the chance to enjoy every benefit of advancement.