Visa announced that it is planning a new service that will let US customers send money directly to one another, presenting new competition to PayPal.
Visa already lets people send money to Visa accounts in many other countries, but this will be the first time it will offer the service in the US. There has been no announcement as yet on whether the service will be available to customers in the UK.
People who use banks that participate in the new programme will be able to send money directly to someone's Visa account by entering the recipient's Visa account number, email address or mobile phone number in an online payment form.
Visa said it has made deals with two payment companies, Fiserv and CashEdge, so that those companies can allow their customers to send money to Visa accounts. Banks offer Fiserv's ZashPay and CashEdge's Popmoney services to their customers for sending money to other people. The first banks are expected to make the Visa service available through CashEdge and Fiserv in the second half of the year, Visa said. It's not clear whether Visa will offer the service on its own.
Visa is late to the person-to-person payment market in the US. PayPal has been offering it for years and doesn't require a user to bank with a specific institution. However, with PayPal, users have to sign up for the service to receive the money and may have to take additional steps depending on how they want to use the money.
In reponse, PayPal pointed out its broader reach. "As the leader in global online payments for the last twelve years, PayPal has unmatched advantages that we believe put us ahead of the competition," said Anuj Nayar, a PayPal spokesman. "PayPal connects to 57 different financial networks and 15,000 local banks in 190 markets, not just in the Visa network, but with payment methods that meet our customers' preferences in markets around the world."