A lot of people seem to hate Bank of America, if the comments on my post covering the Bank of America Overdraft Fee Settlement  is any indication, but I really like being able to transfer money to my friends when I owe them (they need an account too). I’d use Paypal except Paypal will charge fees, which is too much considering I can write a check (for free) or pay in cash the next time I see them (also for free).
So when I saw that Ally was participating in Popmoney, I took a closer look. I wanted to know how much it would cost me to send money and I was surprised to learn it was free. While it’s basically the next step in Billpay (instead of sending a paper check, it sends electronic funds), it’s still pretty cool that it’s available and free.
How Does It Work?
You log into your bank account, one that supports Popmoney, and simply “send” money to an email address, mobile number, or you can enter direct bank account information. They can an email or text, with which they can use to direct where to put the funds.
If you’re going to use Ally, go to Transfer Funds and then click the “between your Ally accounts and other people” button. This sends you to the Popmoney section. The first step in setting up your account is verifying your mobile number, which takes about two seconds. From there, you can immediately send someone money (including sending a recurring payment).
When you send payment, you can send it to an email or phone, or enter direct deposit information. I didn’t go through with the process to find out what happens after you send money but I imagine it’s pretty straightforward.
How is this free?
I don’t know for sure but I imagine banks pay Popmoney, and its parent company CashEdge, for this service. Eventually, I see this as something of a Paypal killer for people who use Paypal to send money to their friends. While it doesn’t offer any merchant features, thus protecting that piece of Paypal’s business, it is a nice convenient feature banks can show off to their users.
What about Security?
Free is fantastic but is it secure? It’s not a bank, so there’s no FDIC insurance or anything else involved, but the website and its services are 128-bit SSL encrypted. That’s about as secure as you can get.
I’m probably making a lot more out of this than it truly warrants but anytime I can move more money out of checking and into online savings, I’m happy. With this new service and the capability to send money to friends from an online savings account , I can shift more of my checking funds into savings.