Dublin-based gateway provider Realex Payments is working to make personal and business banking less expensive by offering payments account services.
The Realex Fire account is "exactly like your bank account, but we are not a creditor or a lender, so it is used just for payments," says Gary Conroy, the chief operating officer and deputy CEO at Realex. "It's not a virtual account like an e-wallet, it's an actual account in which users are given a BIC [sort code] and an IBAN number."
Realex became a regulated entity in the eyes of Irish law in 2009 through the country's Payments Services Directive seeking cost-effective alternative payment methods. By offering the payments accounts to clients in addition to the payment gateway services, Realex can "straddle the world of bank account payments, card payments and alternative payments," Conroy says.
Realex currently serves 12,500 e-commerce merchants, primarily in Ireland and the U.K., with its gateway. Realex obtained about half of those merchants through its own direct sales or partner channels, and many of the remainder came through its major white-label clients, Global Payments and Elavon.
"We will set up white-label business accounts for those processors, banks or other third-party partners and they resell the services to their merchant clients," Conroy says.
While most current clients operate online, Realex eventually wants to make its service available to "any business that needs to get paid and wants to accept PayPal, credit cards and other payment methods that are fully interoperable with the clearing systems in Europe," Conroy says. All of those funds from payment methods are collected into the payment account, Conroy adds.
A Realex Fire personal account for consumers, currently available in Ireland, connects to the banking network and does not have transaction fees. Users can open an account online and transfer funds from other bank accounts.
Realex Fire is meant to be a "social" account, Conroy says. Account owners create a circle of people to send funds and payment requests. They can receive payment notifications through Facebook or a mobile app.
The Realex Fire business account operates in essentially the same way, but with an emphasis on payment processing. The account, scheduled for release later this year, is designed to serve micro merchants, charities, corporations, clubs, schools and others in need of payment processing. Eventually, Realex will connect the accounts to several banking networks across Europe to support multiple currencies, Conroy says. Businesses will be able to integrate payment processing with their own applications and systems through application programming interfaces.
Realex has a regulatory advantage in that the personal account operates much like a prepaid account, but is plugged into the banking network, says Zil Bareisis, a London-based senior analyst for research firm Celent.
"Realex Fire can probably deliver a similar experience eventually, but instead it is focused on the ease of payment in e-commerce now," Bareisis adds.
Realex's business account will have more potential because it can be offered in combination with its gateway services, Bareisis says.
The Central Bank of Ireland regulates Realex Financial Services Ltd., which allows it to provide the payment accounts linked to the banking network and payment clearing services.
Realex is interested in eventually adding U.S. dollars to its multi-currency accounts, Conroy says. "That would be a compelling proposition for U.S. businesses looking to come into Europe," he says. "They could see all of their transactions on a global basis through one interface and have all funds going into the clearing networks, all integrated into their payment gateway."
To encourage consumer adoption in the U.K., Realex will have to emphasize ease of use, says Gareth Lodge, also a London-based analyst with Celent.
"As a consumer I want to simplify my life, not have yet more accounts and limitations," Lodge says. "My assumption is, that because Realex is a merchant gateway, they could have plans for advertising to bypass card networks by using their own accounts, much like PayPal."
Even though Realex currently helps banks sell the e-commerce gateway, Conroy says traditional banks "aren't quite sure what to make of us."