60% of US Consumers Use P2P Apps to Pay Bills

Peer-to-peer (P2P) payment platforms have gained popularity, especially among young consumers who value quick and seamless transactions.

As adoption expands, however, these platforms face the challenge of balancing user convenience with the essential need to meet regulatory standards and prevent fraud.

The PYMNTS Intelligence report “Peer Pressure: Balancing Convenience With Compliance in P2P Payments,” found that this balance has become a challenge for FinTechs seeking to maintain growth and trust in the P2P payments market.

Rising Popularity of P2P Payments Among Young Consumers

The appeal of P2P payments has been particularly strong among millennials and Generation Z. These groups are more attracted to digital-first payments and use them for online and in-store purchases. According to the report, 53% of consumers aged 18-25 and half of those aged 26-41 use P2P apps more frequently due to economic pressures like inflation. As a result, platforms like Zelle have seen growth of 27%. In contrast, traditional credit and debit payments grew by 3%.

The rise in use has led to the emergence of the super app trend, where companies integrate P2P payments into service offerings. For example, social platform X and influencer marketing platform Lydia have either incorporated or plan to integrate payment services into their product ecosystems. According to the report, 70% of consumers, particularly those with higher incomes, expressed interest in using a super app.

Challenges in Meeting Customer Expectations

Despite the popularity of P2P payments, consumer satisfaction with these services is not universal. P2P platforms struggle to meet the diverse expectations of users, with many consumers encountering issues related to transaction speed and reliability. Consider that 60% of U.S. consumers use P2P apps to pay bills, but 70% of users experience friction when paying bills via mobile wallets. The report found that one-quarter of users cited security and authentication as their primary frustrations.

While most FinTechs acknowledge their customers’ payment issues, there is a disconnect in understanding the root causes. The report revealed that 41% of consumers who deposit money and 28% who withdraw money expressed dissatisfaction with the lack of guarantees for fund availability or transaction speed. Only a fraction of FinTechs recognized these concerns, revealing a gap in meeting customer expectations.

Balancing Fraud Prevention and Regulatory Compliance

As P2P payments become more integrated into daily transactions, the risk of fraud increases, prompting stricter regulatory oversight. Financial institutions are using technologies like artificial intelligence and machine learning to detect and prevent fraud. More than 70% of financial institutions with assets over $5 billion use these tools, per the report.

Despite these advancements, regulators are urging P2P platforms to enhance fraud prevention. The Manhattan District Attorney’s Office has called on platforms like Zelle, Venmo and Cash App to implement better safeguards for users. As P2P payments continue to rise in popularity, platforms must balance user convenience with the need for tighter security measures. Using AI, encryption and biometric verification will be important for ensuring secure transactions while adhering to regulatory requirements.