As Citigroup has gotten acclimated with person-to-person payments, it's starting to loosen the restrictions on Popmoney, the Fiserv technology it offers to online banking customers.
Citi has taken a measured approach to Popmoney, carefully monitoring usage metrics and fraud risks. It's gradually made Popmoney a focal point in its suite of online banking services and in the first quarter of 2013, it doubled the daily and monthly limits on how much money individuals can send each other.
"We have a wide range of money-moving options on the site, so we wanted to make sure we had a clear understanding of how it was performing before we really started to ramp up both the promotion and availability of higher limits to customers," says Michael Marion, senior vice president and digital product manager of Citi Consumer Banking.
Citibank customers can now send $2,000 per day and $10,000 per month, up from the previous limits of $1,000 and $5,000 for funds sent to a bank account and the $500/$2,500 caps on funds sent to an email address.
That's an important change, given that the two biggest consumer use-cases for Popmoney are paying rent and shared living expenses, says Tom Roberts, Fiserv's senior vice president of electronic payments marketing.
"Depending on where you live, rent can be high, so limits really do make a difference around things like these larger payments," Roberts says. "Citi's already made an announcement about it and we see other folks tinkering with the idea of looking at limits."
The number of Citibank customers registered for Popmoney and who made a transaction from desktop computers increased 85% year-over-year in May, while consumers that access the service through Citi's smartphone app grew 290% during the same period (Citi would not disclose the actual number of users).
The larger increase of mobile users parallels an overall shift to mobile-based online banking, Marion says. Citibank hasn't tracked the overlap in consumers that use Popmoney on both desktop and mobile devices, but anecdotally, Marion says it's a small population of users.
Roberts says that dynamic is a reflection of Popmoney's biggest age demographic, 22- to 32-year-olds.
"That goes back to that Gen Y profile, people who are really wedded to their phone and less wedded to an online experience," he says. "I think that's one of the reasons so many financial institutions are investing so much into smartphone and tablet applications."
While Popmoney provides a consumer-direct website and mobile app to individuals whose banks don't offer Popmoney, Roberts says the "vast majority" of transactions are conducted through its bank partners for reasons beyond the $0.95 transaction fee charged on the consumer-direct channel.
"If people understand their financial institution offers it, they already have a password and ID for online or mobile banking, so they have a sense of added security because it's not another third-party relationship," he says.
Fiserv acquired CashEdge, the company that developed Popmoney, in 2011 and combined it with its own ZashPay P2P technology in June 2012, creating a service offered by 1,200 financial institutions. That number has grown to nearly 2,000 retail banks, says Roberts, and includes relationships with Ally Bank, BBVA Compass, PNC, SunTrust and others.
"Growing that network is really fundamentally important to us, but even still within those organizations that do offer it, we still have to continue to work with them to promote the awareness of what's effectively a new category," Roberts says.
But Fiserv continues to develop the consumer-direct tools, and plans to launch of a new version of the desktop website in July, because it serves as a proving ground for new features before they're introduced to banks as standard features.
Despite the growth of mobile users and its move to relax transaction limits, Citibank has yet to fully embrace all of Popmoney's features, most notably the ability to send money using a debit card or to a recipient's mobile phone number via text messaging. Fiserv also recently began offering a real-time version of Popmoney that uses its Accel payment network to immediately deliver funds to recipients' accounts, instead of the days it takes to clear a Popmoney transaction over Automated Clearing Housing rails.
"Popmoney is doing a lot of innovation in terms of the speed of transactions and the different funding sources, so we are exploring expanding the service and making it more customer-friendly and making it faster for customers over time," Marion says. "But those are things we need to evaluate and work on with the regulators to make sure that there are no impacts to the security of the money movement functionality."
While Citibank's approach to offering P2P payments has been cautious, it has already evolved. Citibank started offering Popmoney as a desktop-only service in October 2010, and later integrated the service into its smartphone app in February 2012. The initial limits on transaction amounts were higher when money was sent to a bank account and routing numbers than funds sent to an email address. But when the limits were reevaluated, the increase was applied across the board.
"As we monitored the performance of those different methods over the first year, we really didnt see that much differentiation in terms of the behavior or in terms of the fraud results," Marion says. "So when we increased the limits we eliminated the differentiation between the destinations."
That approach is likely to continue as Citi explores adopting new features for Popmoney, as well as other ways consumers can move money.
"Making sure the identity verification is strong is definitely something that is a reliable aspect of the Popmoney service and just like with any other funds transfer or depositing or cashing checks, making sure the funds availability is readily supported," Marion says. "Those are the things we watch for in terms of the security of the transactions and those trends are something that we feel really good about."