Beem It, a startup owned by three of Australia’s largest banks, has launched a free real-time social payments app designed to run on older debit networks instead of the country's new faster payments platform.

Market research commissioned by Beem It indicates that, because of unpaid small debts between friends, Australia’s national unpaid “mate” debt is worth A$6.2 billion. To get around the embarrassment of asking a friend for repayment, Beem It offers the ability to request money through an app. Rather than use the New Payments Platform (NPP), Australia’s faster payments system, Beem It links to users' debit cards as a means of achieving scale.

“There are about 43 million debit cards in Australia for a population of 24 million, so debit cards are ubiquitous," said Mark Wood, Beem It’s CEO. “We think people prefer to receive their funds in the bank accounts they already have, instead of a third-party wallet. In Australia, millennials are highly skewed towards debit, while older demographics use both debit and credit cards."

Commonwealth Bank of Australia ATM
Commonwealth Bank of Australia is one of the banks behind Beem It, which uses debit rails to support faster payments at scale. Bloomberg News

One of Beem It's main rivals is Osko, a P2P transfer service operated by BPAY, Australia’s bank-owned bill payments provider. Osko is an overlay service on the NPP; both launched in February 2018.

Unlike Osko, which transfers funds directly between users’ bank accounts, Beem It uses Visa and Mastercard debit rails, along with Australia’s Eftpos domestic debit system. All Australian debit cards are co-badged with either a Visa or Mastercard debit tag and an Eftpos tag.

While other services such as Lyft's Express Pay rely on the networks' instant debit systems, Beem It splits the task between Visa/Mastercard and Eftpos. Beem It senders’ bank accounts are debited in real time via their Mastercard or Visa debit card, and recipients’ bank accounts are credited in real-time via Eftpos.

“This is because Visa and Mastercard have yet to launch their P2P payment services Visa Direct and Mastercard Send in Australia,” Wood said. "We’re looking at what other payment sources to add to Beem It, such as credit cards.”

Beem It will consider interfacing with the NPP once the faster payments platform has gained ubiquity in Australia and offers capabilities Beem It needs, according to Wood. “But right now, the debit card networks meet our needs," he added.

The app also competes with Finch, an Australian fintech that developed a P2P transfer app targeted at millennials and which received A$2.5 million in seed capital in November 2017.

The Beem It app lets friends split bills and reimburse each other for meals or drinks or for their share of household expenses or rent, but it can also be used to pay small businesses.

To register, users provide their mobile phone number, email address, Australian Visa or Mastercard debit card details, plus a government-issued ID document such as a driver’s license. They then create a user handle for sending payments to other Beem It users. Beem It sending transactions are limited to A$200 per day, with a monthly receiving limit of A$10,000.

Beem It is owned by Commonwealth Bank of Australia, National Bank of Australia (NAB) and Westpac, which announced the joint venture last October. Nevertheless, customers of any Australian financial institution can use Beem It.

"We have no charges for using Beem It, but we’ll looking at how we can monetize our app further on," Wood said.

Australia’s other major bank, Australia and New Zealand Banking group (ANZ), isn’t a shareholder in Beem It. Wood says Beem It is open to other Australian financial institutions taking an equity stake in its business.

The launch of Beem It follows the refusal by the Australian Competition and Consumer Commission (ACCC) to allow Commonwealth Bank, NAB, Westpac and Bendigo and Adelaide Bank to negotiate as a cartel with Apple over access to the NFC technology on iPhones so they could launch their own mobile wallets on the iOS platform. The four banks declined to offer Apple Pay to their cardholders because Apple refused to provide open access to iPhone NFC hardware.

However, ANZ did introduce Apple Pay, as did Amex Australia, Citi Australia, HSBC Australia, and — eventually — Adelaide and Bendigo Bank.

As of May 28, the Beem It app had over 10,000 downloads from the iOS and Android app stores since its soft launch in early May.

“The app was designed after consultations with users to make sure we offer what they actually need, rather than what we think they need," Wood said. "Everything we do is directed by our customers, whether it is the user experience in the app, our terms and conditions or our marketing.”

The Beem It app is designed to be conversational. “You can send a friend a request for his share of last night’s bar bill, and include some banter about what a great night out everyone had,” Wood said. “We think of Beem It as social payments, but it isn’t as social as Venmo which is quite open in the information it displays about users’ purchases and payments. Our approach is to provide an engaging but private interface which lets users chat back and forth.”

If merchants have registered with Beem It, consumers can make payments to them, although the main use case for the app is friends and family. Under Australian payments regulations, merchants can surcharge for accepting cards.

Currently, Beem It hasn’t seen a use case for extending its app to mobile commerce or online commerce. It will go that route if its users express interest, Wood said.

“A year ago, Australians didn’t really have a widely-available cross-bank P2P solution,” said Brad Pragnell, principal of Australian payments consultancy 34 South 45 North Consulting. “Now they have two in the form of Osko by BPAY and Beem It."

Pragnell says there are drawbacks with Beem It.

“The registration process looks rather involved, due to users having to provide ID information,” he said. “For Osko payments, you can pay with the other person's bank BSB (bank state branch i.e. routing) number and account number — recipients don’t need to register in this case, but they must register with PayID if the sender wants to make an Osko payment using the recipient’s mobile number or email address.”

Grant Halverson, CEO of Australian payments consultancy McLean Roche, likened Beem It to the U.S. banks' Zelle network.

“The key issue is whether Beem It will be seen as better than the banking industry’s Osko faster payments initiative," Halverson said. "Also, Beem It puts its three bank owners in a conflict of interest with the Reserve Bank of Australia, our central bank. What will the regulator do to ensure these three banks promote Osko, which is supposed to be co-owned by the major banks?”

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Robin Arnfield

Robin Arnfield is a freelance banking and payments industry journalist. He began his journalism career in the U.K. writing for a daily business news service in 1983 and began covering payments in 1986. He has been based in Canada since 2003.