Paypal is seen by many as a convenient way to send and receive money online, but it has its critics too, who say fees and exchange rates are too high. A quick search of the Internet will instantly bring up a tirade of complaints from hundreds of unhappy Paypal users who say there is just too much bureaucracy and too little privacy when it comes to data.
Indeed, it’s surprising that Paypal hasn’t already faced more competition already. But all that looks likely to change with the advent of Realex Fire, a new product from a Dublin based online payment company.
Realex Fire is no start-up or flash in the pan. The firm employs 200 people in Dublin, London and Paris and is completely self-funding. With companies such as Aer Lingus Group PLC (LON:AERA), Virgin and Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) on board, revenues have grown from €9.8 million last year to €14 million this year. Realex Fire now processes €24 billion worth of online payments annually for 12,000 suppliers.
A new way to pay
Colm Lyon is the man behind Realex Fire and he talked to Valuewalk about the concept behind the new service:
‘We wanted to create a new way for consumers and businesses to pay and be paid – a service that would truly shake up the payments landscape, so we sought and secured a licence to operate as Payments Institution, under the Payment Services Directive in 2009. With this in place, we then went about joining the clearing (or banking) payment systems and networks. We wanted to create accessibility for users and give ourselves the chance to create a different style of payment instrument, but at the same time, one that was based on a bank account.’
Realex Fire stepping ahead in online payments
It could be argued that Lyon’s new service takes the Paypal concept one step further as Realex Fire enables consumers to pay bills via Smartphones and even social networks such as Facebook Inc (NASDAQ:FB).
‘The idea of connecting to Facebook Inc (NASDAQ:FB) was so we could alert people when they receive either a payment request from another user or when they get paid. Many Facebook Inc (NASDAQ:FB) users will leave their account logged in while they are working away and it is an ideal way to be notified. The main social aspect of the service is however around seeing your payments organised by those you pay and those who pay you.’
The big question, however, is, can the company really challenge the likes of Paypal, given its market monopoly? Colm says their product is different:
‘What we are offering is not a wallet but an account and we are targeting regular businesses who wish to be paid electronically, typically by bank transfer.’
Banking made more personal
The company had to get access to the banks’ clearing system to operate what could be seen as a current account. The service operates as a kind of bank account with a sort code, BIC and IBAN. Surely, setting up what is tantamount to a ‘bank’ meant a lot of bureaucracy?
‘The process to acquire the licence and join the Irish, SEPA and UK clearing systems has been very large and expensive. We have a Personal Account and a Business Account – the latter is in development. What we have launched to date is a basic product for consumers in Ireland – it does not have all the features of a current account. But under the bonnet – it is an account that is fully addressable into the clearing system. The next development is the first release of the business account and going live in the UK. We see several areas of opportunity, including cheque replacement.’
Safety with Realex Fire
Realex Fire is entirely safe as it relies on a push payment system that transfers funds automatically, instead of traditional card transactions where there is a risk that the funds are not in the account to begin with. And, the entire operation is regulated by the Central Bank.
Given the scale of the operation and the fact that many Irish account holders are less than happy with the treatment doled out by Irish banks in the wake of the bail-out, does Realex Fire have any plans to take them on with a form of current account?
Realex Fire features
‘At present we offer a basic payment account. While it is addressable into the clearing we do not have all the features of a current account. Next is the basic business account and then the UK. After that we will decide where to focus the development, which at this stage is likely to be enhancing the business account and related services.’
Colm says that the firm’s initial focus will be on businesses, helping them to get paid faster, with less risk and cost. By delivering this, he hopes private customers will adopt Realex Fire too, but with the growing distaste for traditional banks in Ireland and a definite hankering for an alternative to Paypal, Realex Fire could have huge potential with private consumers. Realex Fire mightn’t be too well known right now, but the market is ripe and ready for a new and innovative online payment system such as this one.