The field of P2P competitors has grown significantly since JPMorgan Chase, Bank of America and Wells Fargo founded clearXchange LLC in 2011, and the mega-banks' initiative still looks very much like it did three years ago.
Of its founding members, JPMorgan Chase still hasn't gone live, and Denver-based FirstBank, which joined at the beginning of 2014, only went live last week. Capital One signed on in February 2014, but it is still not listed as a participant on the clearXchange website.
ClearXchange's main selling point is its scale; its founding members alone account for roughly half of the U.S. online banking market. But in the years since its launch, many nonbanks have released or revised their own P2P systems, focusing on either speeding up payments or eliminating the need to log into a bank's website or app to move money.
For example, Google added a P2P feature to its Gmail system in May 2013 and Square launched an email-based P2P system called Square Cash later the same year. The bank vendor Fiserv is tapping its debit network to enable fast P2P payments, the alternative payment provider Dwolla is using its technology to speed up payments for banks like BBVA, and the digital currency Bitcoin has risen to popularity in part on its ability to move money in about 10 minutes.
In the face of this new competition, clearXchange remains committed to its cause. The P2P market is massive, and the clearXchange banks are busily increasing their share, said Michael Kennedy, CEO and director of clearXchange.
"Business has been great, more than doubling growth from the previous year," said Kennedy, who said he could not reveal specific numbers of transactions.
The heightened competition is "a good thing," he added. "We have always said that we see P2P as a trillion-dollar market, with most of those transactions with checks and cash."
When alternative P2P options get press attention, many consumers turn to their banks first before trying a third party's service, Kennedy said. ClearXchange banks can offer the convenience of sending money to an e-mail address or phone number, backed by a bank's security, Kennedy said.
And scale remains a significant part of clearXchange's appeal, said Jeff Kaufman, president of retail services at FirstBank.
"We think of clearXchange as a scale game," Kaufman said. "Getting into it with the three founding partners adds scale right out of the gate."
As new payment options like Apple Pay promote the use of tokenization to protect account data, clearXchange can already benefit from its use of the same security, Kaufman noted.
"When transmitting tokens, clearXchange doesn't have to store customer account information on its hub for routing purposes," Kaufman said.
ClearXchange will be a strong contender in a crowded market, said Eric Grover, payments industry consultant at Minden, Nev.-based Intrepid Ventures.
"They should get a lot of the P2P use within their own base, however they are not going to own the P2P market," Grover said. Many consumers making P2P payments do so with Western Union and PayPal, and the number of options continues to grow worldwide, Grover said.
However, clearXchange is in a position to address real-time payments while also "cannibalizing paper checks and the tradition of people pulling cash out of their pockets to pay someone else," Grover added. "ClearXchange is not a groundbreaking thing, but it's a service that enhances the base products of its shareholders."
Earlier this year, Bank of America announced its intention to expand its clearXchange offerings to include corporate money transfers, such as insurance payouts to customers, over the P2P system's rails.
That move signaled that clearXchange is not just a P2P system but a company that can move any paper transactions to digital, Kennedy said.
"We first launched P2P, because that's what customers wanted, but the expansion through Bank of America to add business to consumer payments is significant," Kennedy said.
Capital One's decision to join clearXchange was seen as a major boost for the bank-led network because of its $297 billion in assets and more than 900 branch locations in the east and south.
But despite its growing scale, clearXchange faces the same challenge as other P2P providers in that the service lacks ubiquity from a consumer standpoint, said Jeff Crawford, senior consultant with First Annapolis Consulting LLC.
"A consumer has to have a relatively high degree of confidence that his payment will go through to someone else without having to sign up for a new service," Crawford said. "Until then, such solutions will remain niche."