How interoperability contributes to the expansion of P2P payments

Once social distancing, store closures, and other health-related changes became part of the daily lives of individuals around the world, it didn’t take long for them to adjust their shopping habits to match. to the new normal.

Consumers of all ages have started to research payment methods that allow them to avoid face-to-face interactions, which has led many to migrate to digital solutions to manage their payment needs. A December survey of more than 2,000 Americans found that since the onset of the health crisis, 65% had used a mobile app or digital platform to make a purchase for the first time. While payment service providers and merchants have a long history of providing consumers with digital shopping experiences, the fast payment methods that have allowed them to avoid physical contact and transact seamlessly around the world. whole have grown considerably over the past year as e-commerce accelerates.

Some payment tools have experienced particularly strong growth as they help consumers meet their new needs, including peer-to-peer (P2P) payments. P2P solution providers allow individuals and businesses to use payment apps or portals to instantly transfer funds between them, making them well suited to the fast-paced digital nature of modern commerce. The December survey found that the use of P2P payments nearly doubled year over year in 2020, with a staggering 77% of respondents saying they used a P2P app last year, compared to 42% in 2019. In addition, 89% of consumers plan to continue using P2P. apps as often as they do now, even after the pandemic is over, a testament to their endurance.

Still, there is room for improvement in the P2P payments space. Consumers and businesses tend to favor certain apps when doing their transactions, with 32% of consumers using Cash App, 26% using Venmo from PayPal, and 20% using Zelle from Early Warning Services. The problem is that these services operate separately on closed networks, which means that users who want to pay and be paid must agree to download and use the solution used by their peers. The following Deep Dive examines the increase in P2P payments and why interoperability is needed to help them grow across borders in the years to come.

Using P2P payment rails

P2P services have experienced a boom in adoption during the pandemic, and there is no reason to believe that consumer habits will change once it is over. Research has found that around 20% of consumers use P2P payments more than before the health crisis, and the method is no longer seen as just a way to send money to friends and family. . These instant digital payments are now used for a whole host of expenses, such as compensating small businesses and service providers, donating to charities, and even paying rent.

The use of P2P payments is often associated with young consumers, but recent surveys have shown that these options appeal to consumers of all ages. One study found that 45% of US consumers aged 55 to 72 have used or intend to use P2P services, in fact. Consumers in this age group also seem generally confident and satisfied when using these tools. This suggests that these services will start to be adopted more by consumers interested in participating in a digital economy.

FIs across the country are increasingly aware of the attractiveness of P2P payments, with large banks as well as credit unions (CUs) and regional players integrating these services. As a result, the global P2P payments industry was worth nearly $ 2 billion last year and is expected to total $ 4.6 billion by 2028, a CAGR of over 11%.

The need for interoperability of P2P payments

P2P payment services are poised to continue to grow, but there are still several obstacles preventing consumers from using the solutions to make instant payments to anyone, anywhere, anytime. The closed nature of these P2P networks means that consumers and the businesses that use them have to download and operate specific apps, be it Cash App, Venmo, or Zelle, if they want to transact with partners through a specific service.

Changing that will require creating services that allow interoperability across all platforms, according to Ingo Money CEO Drew Edwards. Allowing consumers to use their favorite P2P apps is key to giving them true payment choice, he explained, removing another friction from the P2P payment process and bringing the space closer to ubiquity.

The use of P2P payments has accelerated rapidly over the past 17 months, and it shows little sign of slowing down. Giving consumers the ability to transact seamlessly and instantly with their peers and businesses across multiple platforms is likely to be the key to driving the growth of the space to new heights in the future.

Source link

About Matthew R. Dailey

Check Also

Innovative mobile payment technology market strategy by 2031 – Queen Anne and Mangolia News

Mobile Payment Technology Market study by “Marketreports.info” provides details on market dynamics affecting Mobile Payment …

Leave a Reply

Your email address will not be published.