Small person-to-person payments are one of the major areas where eBanking currently falls down. But Egg’s new service covers amounts from GBP1 to GBP200, with the same functionality as personal checks. It could establish Egg as a major force in the European P2P ePayments market, which has lagged the US but is now set for significant growth.
UK eBank Egg has launched its own online payments scheme.
UK online bank Egg, which will announce its Q1 results on Wednesday, will this week launch a system that allows its customers to make small cash payments over the Internet to anyone with an email address and a UK bank account.
Under the system, Egg customers will register for an Egg Pay account. They can then make payments at the Egg Pay section of the Egg website, by entering the recipient’s email address and setting them a personal security question. The funds will be debited from their normal Egg account and put into the Egg Pay account.
The recipient will get an email sending them to the Egg Pay website, where they can answer the security question, enter their bank details, and then receive the payment by bank transfer. The service works for any amount between GBP1-200.
It’s a sign that the ePayments market is growing up, with companies investing in appropriate solutions and dumping pointless ones. Only recently, Egg abandoned its eWallet scheme, because consumers are increasingly happy to use credit cards to pay online retailers. But there is no convenient digital alternative to personal checks, as banks’ online transfer products require the recipient’s account details. This makes person-to-person (P2P) solutions a strong growth area.
P2P has yet to take off in most European countries to the same degree as in the US, where Paypal and Citibank’s eCiti have both been highly successful. But it is set for strong growth over the next few years, and online banks such as Egg are in an ideal position to get into the market.
Financial services institutions have two major advantages over other companies in running P2P schemes: their existing customer bases (Egg has more than two million customers) and widespread public trust. So particularly if its international expansion plans pay off, Egg could end up as a major force in European P2P payments.
Related research: Datamonitor, 2002: European ePayments 2002