Digital Payments

As P2P Payments Grow, More Consumer Groups Get Into The Mix

As P2P Payments Grow, More Consumer Groups Get Into The Mix

P2P payment services are stretching their wings, headed into the new decade with mostly robust growth – and even some new plans to gain customers and keep a tight hold on existing consumers.

Recently released third-quarter financials show how this particular payment method is gaining traction. For starters, Zelle’s Q3 results show that its year-over-year payment values increased by 58 percent, while transaction volumes rose by 73 percent. In addition, Early Warning Services, the network operator behind Zelle, announced that $49 billion was sent through the Zelle network on 196 million transactions during Q3 2019. More than 600 financial institutions are currently contracted to participate on the Zelle network, including 254 that are processing transactions, as well as the 5,516 banks represented by their customers using the Zelle app.

“Today, one in two adults with a U.S. bank account has access to Zelle in their mobile banking app,” Lou Anne Alexander, group president of payments solutions at Early Warning, said in a press release.

Other Signs of Popularity

That’s not all. Venmo, the P2P service owned by PayPal, has a Q3 processed volume of some $27 billion, while P2P volume stood at $51 billion. Venmo was up 64 percent year on year, said management. PayPal CEO Daniel Schulman said Venmo could see as much as $400 million in annualized revenue.

At about the same time, Venmo announced a new feature designed to increase the appeal of its P2P offering. It is rolling out a cash-back rewards program for its Venmo Mastercard debit card at certain retailers, as announced in a press release. Venmo Rewards is now offering 5 percent cash back at Target, Sephora, Chevron and Papa John’s, and 4 percent cash back at Dunkin’, Sam’s Club and more for a limited time. Cash-back offers will be changed on an ongoing basis, but users can always see where the deals are by using the Venmo app.

Venmo users can track their earned rewards in the “My Feed” section of the mobile app and choose to share the rewards from featured merchants in the Venmo feed. The cash back will be deposited straight into users’ Venmo accounts, from where it can be used to pay friends in the app, buy things using the card or pay merchants that accept Venmo. The cash back can also be deposited in a user’s bank account.

Visa, too, has recently put more skin in the P2P game. Late in the third quarter, the payment card network said it has formed a strategic partnership with MoneyGram on a P2P money transfer option via which U.S. consumers can send money domestically through MoneyGram to a recipient’s eligible debit card. Fees for the new P2P debit card deposit service start at $1.99. Currently available in the U.S. only, the service is slated to soon expand to other global markets.

Avenues of Growth

Mobile P2P is generally considered appealing to some of the youngest consumers and for good reason. But P2P is developing in a way that could lead to more use – and more regular use – among older consumer segments. PYMNTS research recently dug into that topic. Indeed, financial institutions (FIs) looking to cater to older demographics may find the time is ripe to bring P2P to Generation X (those aged 43 to 54) and baby boomer (aged 55 to 73) consumers, critical bases for many banks. American Bankers Association research shows that adults over the age of 50 were responsible for 70 percent of deposits made in the U.S. and owned 61 percent of bank accounts in 2017.

Technology use has been rising outside the millennial age group, meaning that FIs can increasingly expect middle-aged and older consumers to be ready and able to take advantage of mobile services. A survey conducted earlier this year found that 53 percent of U.S. adults age 65 and older own smartphones – a significant jump over the 42 percent who owned them in 2016 and the 18 percent who did so in 2013. The 2019 numbers for those aged 50 to 64 and those aged 30 to 49 were 79 percent and 92 percent, respectively. The latter group had only slightly smaller ownership than the 96 percent of 18- to 29-year-olds who own smartphones.

It may thus be no surprise that a Q4 2018 survey found that more than half of first-time P2P service users were at least 45 years old. FIs are seeing these trends firsthand as they work to serve customers of all demographics. PYMNTS recently caught up with Kristy Brandon, senior vice president of eBanking at Dallas-based Comerica Bank, on serving this burgeoning group. The FI reports about $72 billion in assets and serves a customer base that includes a larger share of individuals aged 45 and up compared to its peers, Brandon said. Comerica partnered with financial services technology provider Fiserv in the spring of 2018, enabling it to offer Zelle through its mobile banking app. The solution’s popularity has since risen among customers.

“Our 55-and-older customers are very active in Zelle,” Brandon said. “The fact that we’ve had such great adoption shows how, for something like Zelle, it doesn’t matter what your demographic is – everyone has a need.”

P2P keeps on growing, and that growth is almost certain to involve older consumers as well.


New PYMNTS Study: Subscription Commerce Conversion Index – July 2020 

Staying home 24/7 has consumers turning to subscription services for both entertainment and their day-to-day needs. While that’s a great opportunity for providers, it also presents a challenge — 27.4 million consumers are looking to cancel their subscriptions because of friction and cost concerns. In the latest Subscription Commerce Conversion Index, PYMNTS reveals the five key features that can help companies keep subscribers loyal despite today’s challenging economic times.