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Making that payment has just gotten easier

Tina Orem

May 22, 2014

A sarcastic person will tell you that paying bills is one of the great joys of life. Back in the day, the chore meant sitting down with a stack of bills, writing checks, and then shoving things angrily into envelopes while complaining about the rising cost of stamps.

Today, paying bills is just as “joyous,” but (mostly) gone are the envelopes and stamps-cursing. Instead, we move money electronically from our bank accounts to those we owe.

[Related story: Secure credit cards just got cheaper, simpler]

However, there's still plenty to gripe about. You've got to schedule the payment, for example, and go to a website or two, enter account numbers, enter passwords, confirm the payment, and enter the payment into your checkbook program. All of that can be a hassle, which is why Capital One's new email payments system is so interesting.

Here's the deal: In February 2014, Capital One purchased a stake in ClearXchange, which is a network formed in 2011 by Bank of America, JPMorgan Chase and Wells Fargo. The network allows people to send money to each other without having to establish accounts outside of their primary banks.Click to email me

Using the service is pretty simple, according to Capital One. Customers just log in to the bank's website, enter a phone number or email address, and Capital One handles the transaction. ClearXchange says that customers of any of the member banks can use the service.

ClearXchange is whitelabeled for banks, according to the company, which means you probably won't see the ClearXchange brand name in correspondence from Capital One if you're a customer — the service is known by different names at different banks.

Using the service will likely involve a fee, though perhaps not initially. Capital One hasn't disclosed those details, but if its plan is similar to what Bank of America did when it rolled out the service, then it will be free for a limited time.

The game-changer here is that customers can move funds directly from their existing checking accounts using an email address or a mobile number instead of using account numbers and routing numbers.

There are a few glitches, though. If the recipient isn't a customer of one of the network banks, you'll only be able to receive money from those folks if they've registered on the ClearXchange website. Another important thing to remember is that, at least for now, ClearXchange is not for paying your credit card bill. It is designed for person-to-person (P2P) payments.

P2P payments are part of the next wave of financial technology. Companies such as PayPal have been doing it for years, but now Capital One, which has 50 million customers, is eager to get some of that market share, as are the other network partners. And with Capital One joining the mix, ClearXchange now can reach 50 percent of the mobile banking customers in the United States — a huge market.