As the Federal Reserve and other entities push toward developing a faster payments system in the U.S., it has become increasingly apparent that a good place to start is through debit networks.
The debit rails have been at the heart of real-time systems developed by companies like FIS and Fiserv, and Shazam Inc. is adding its own spin by tying its person-to-person product to mobile and ATMs through its Shazam Bolt$ app.
"If you want to move money back and forth more quickly than it happens today, it is really all about debit right now," said Richard Oglesby, senior analyst at Double Diamond Payments Research. "The government and the Fed is talking about speeding up ACH, but debit is the way to make it happen in the short run and maybe even long term."
Shazam's P2P app allows debit cardholders to transfer money to each other via e-mail addresses for immediate payments. It also has an ATM locator to direct users to Shazam network machines.
Shazam offers the technology at no cost to its 1,400 financial institutions, and it plans to make it available to other debit networks such as Star and Pulse in the future, said Dan Kramer, senior vice president of marketing and merchandising operations for Des Moines, Iowa-based Shazam.
"We looked at what was happening outside in the industry for real-time payments, and many are not in existence yet," Kramer said. "Eventually the transactions are settled through ACH, but the effect of real-time is the key. The funds are available immediately."
Many consumers already have the Shazam Bolt$ app, as it has served as a security tool for the past two years, sending transaction notifications to users based on parameters such as the dollar amount or location of a particular debit transaction.
In potentially targeting other debit networks with the P2P service, Shazam is essentially hoping to develop a smaller version of the clearXchange P2P network established by the country's major banks.
ClearXchange didn't appear to gain much steam since the mega-banks' initiative came together in 2011, but CEO and director Michael Kennedy has said the clearXchange banks have seen P2P usage double amongst its customers in the past year.
"This is a growing trend," Oglesby said. "But the big question is who is going to connect all of the banks that are not participating?"
Ultimately, it may be up to the likes of Visa and MasterCard to get banks connected to a universal P2P system, Oglesby said. "They are looking at it and probably thinking, 'That is something we can do.'"