|By Jim Bruene on September 5, 2002 8:57 AM | Comments|
PayCast is a Dallas-based technology spinout from online trading company TradeCast that was acquired by AmeriTrade in April 2001. The technology used by PayCast has been in development since 1999, but the company itself was founded in 2001 and has just 9 employees. Investors include TradeCast founders and Buena Venture Associates, an early stage venture company that also backed TradeScape and InsureZone among others.
PayCast is targeting the 5.7 billion checks and wires initiated by consumers each year. Using a single interface, users are able to send funds to others or redistribute funds among their own accounts. Unlike PayPal, PayCast never takes control of client funds; it acts as a switch, authenticating and initiating the movement of funds and then notifying both parties via email.
The company plans to deliver services exclusively through financial institutions. It currently has two signed financial institutions contracts in the early stages of deployment. PayCast is also working on an employee test at a very large bank.
Funds can be moved two ways:
1. Via ACH electronic transfer which typically takes two to three days.
2. Via ATM network: banks using participating ATM networks will have the option of enabling real time transfers between accounts hooked to the network; given typical interchange rates, this option will be substantially costlier.
The CEO and president are both from Texas Capital’s ($1.3 billion; Dallas, TX) BankDirect unit.
|Todd Harbison||CEO||Co-founder of BankDirect, which built a customer base of 40,000 with $400 million in assets within 18 months.|
|Timothy Warner||Pres.||18 years of experience in the information technology industry; worked at BankDirect.|
|Manmeet Singh||CTO||Previously CTO of Tradecast|
The company currently has three products:
- Interbank funds transfer (me2me): Users may transfer money between any of their accounts at any U.S. financial institution.
- Email payments (P2P): Users can send money to anyone in the U.S. The recipient directs the funds into the appropriate bank account upon receiving email notification of the transaction. The sender never sees the recipient’s bank account numbers.
- Telephone transfer: Users establish and maintain payees on the Web but are able to initiate transfers using a telephone call.
- P2P payments and account-to-account transfers are delivered through a single interface .
- When away from their computer, users can initiate transactions via phone.
- Users have the option of adding a secret word to transactions for additional security.
- Users can choose standard delivery (2 to 3 days) or express (real-time).*
- Like FedEx, senders designate who pays the transaction fee (sender or recipient).
- Transaction confirmations can be sent via email, pager, or both.
- Users establish their own daily transaction limits.
*Assuming the bank’s ATM network supports account-to-account transfers and the recipient’s account is a member of the same network
Financial Institution Costs
Costs vary significantly depending on the size and complexity of the implementation, but smaller banks and credit unions could expect to spend in the low five-figures to contract with PayCast plus per-transaction fees dependent on volume and transaction type. Real-time transactions via ATM switch are considerably more costly than 2-3 day ACH entries.
How it Works
PayCast’s “version 1” interface is simple to use, a prerequisite to a successful epayments service (screenshot below). We look forward to version 2 and continued innovation.
Address book of payees.
Payments to non-cardmembers must be password-protected and sent via standard delivery.
Confirmation screen prior to sending.
Account maintenance screen.
The system sends transaction confirmations
via email, pager, or both.
Users can select the maximum daily
transaction limit for their account.
PayCast coined a good name for its service, “personal money transfer.”
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