MasterCard and CertaPay offers P2P solution

Anticipating a surge in the peer-to-peer (P2P) market, MasterCard International and Toronto-based CertaPay Inc. recently announced an alliance to promote the adoption of P2P payments.

“We are pleased to work with CertaPay to offer our members the ability to capture some of today’s fastest-growing transaction segments, including online auctions and other P2P transactions such as cross-border transfers,” said Carl Stefanelli, vice-president, e-commerce product development, at Purchase, N.Y.-based MasterCard International (MCI).

MasterCard members that install CertaPay’s P2P E-mail Money Transfer application will allow customers to send or receive money via real-time e-mail transactions from their own financial institution’s online banking or account management services, the companies said.

To transfer money using the e-mail payment feature, MCI said registered CertaPay customers can simply log in to their online account, insert recipient information (name, e-mail, transfer amount), identify the MasterCard account or other account from which to take the funds, and write a personal note to the recipient.

If the recipient is a customer of a bank using the CertaPay system, the funds are transferred using existing payment clearing arrangements and received in real-time, MCI said, and added recipients will also receive a final confirmation of the deposit of funds.

MasterCard is going to play a big role in the growing P2P dynamic, said CertaPay CEO Michael Ginsberg.

“At this point, all that MCI is officially doing is recommending that their members who want to have P2P, look to our solution,” Ginsberg said. “In those situations where it’s inconvenient to get cash to someone or a cheque to someone, I’ll be able to do it through my financial institution in real-time basis and in non-disputable funds. It’s more like getting a money order than a cheque,” Ginsberg noted.

Banks are uniquely positioned to offer this type of service, as opposed to a third party, Stefanelli added.

“What we find most appealing about the CertaPay system, is that it’s designed to integrate with the bank’s home banking program. Everything about CertaPay is designed to lay in another type of bank online service. That way the bank is dealing only with customers…who they can authenticate. In other words, the holy of holies is home banking,” Stefanelli quipped.

“So if you can authenticate yourself to that kind of system then you’re good to send a hundred bucks to someone. Handling the transactions that way, the bank always knows that the funds are good,” Stefanelli said.

“The other area to keep in mind is it’s a very good way of move money from country to country,” Stefanelli added. “The alternatives are very expensive, whether it’s dealing with a (telegram) type service or a wire transfer. But these services can be adapted to cross-border and we think that there’s a lot a applicability there.”

While the online auction market currently occupies a large chunk of the P2P space, the potential for “real-time” cross-border transfers could break the market wide open, according to Penny Gillespie, senior industry analyst at Giga Information Group Inc. in Centerville, Va.

“There’s sort of a new use being seen, especially as the services go international,” Gillespie said, adding that P2P growth has been much faster than online banking. The price point of P2P is very attractive to small business and the micro-payment market, Gillespie noted, and is possibly another reason MCI is undertaking this initiative.

“The concept of P2P solves the physical world problem of exchanging money,” Gillespie said. “I think as consumers become more comfortable and the payment providers increase the value of their services and reduce the liability to the consumer, I think that we will certainly see more of these (transactions).”