Peer-to-peer (P2P) payments are blazing a hotter path in the digital economy as the second half of 2019 gets underway – and there is fresh evidence that the payment method is not only growing, but helping to influence related endeavors.
The freshest news from this part of the global payments world demonstrates those points.
In case you missed it, it seems PayPal-owned Venmo has added another option for instant transfer of money to a bank account, according to a blog post by the company earlier this week (Aug. 12). This newest P2P offering follows last year’s move by Venmo to add an option to make an instant transfer through a debit card, which would get the money to a bank account in minutes for a 1 percent fee, with a minimum of 25 cents and a maximum of $10. Now, the company is offering an option to transfer money to the bank without a debit card for the same fee. The standard bank transfer, which is free and takes between one and three days, is still available.
As for Venmo, it keeps growing, according to the latest financials from the second quarter of 2019. PayPal said that in Q2, Venmo’s total payment volume increased 70 percent year over year to 24 billion transactions in the quarter. “We continue to expect to drive nearly 100 billion in TPV by year-end,” said PayPal CEO Dan Schulman, adding that 15 million Venmo users have engaged in monetizable transactions. Instant lending is the largest monetizable transaction type with Venmo, said management, and the remainder is split between Venmo Card and Pay with Venmo.
Venmo, of course, is not the only major P2P player in the game.
Zelle P2P payments increased at a slightly faster rate than Venmo in the latest financial reporting period: While year-over-year payment values increased by 56 percent, transaction volume increased by 71 percent, just barely beating the PayPal figure. Early Warning, the network operator of Zelle, also said that in the second quarter of 2019, “$44 billion was sent through the Zelle network on 171 million transactions.”
“More than 64 percent of U.S. demand deposit accounts will have access to Zelle through the 480 financial institutions contracted to join the Zelle Network,” said Al Ko, CEO at Early Warning. “We continue to see double-digit increases in new customer wins each month, demonstrating continued demand for Zelle from national and regional banks and credit unions.”
Although the Zelle-Venmo competition is probably the main event for now, it’s not the only action taking place in the world of P2P payments.
Larger P2P World
The rise of any number of P2P payment options has increasingly brought on board consumers seeking speed in payments, where settlement is marked by seconds and minutes, not hours or days. It’s a well-known fact, too, that corporate payments (the B2B kind) are ripe for digitization and for a wholesale move away from the paper chase, where checks are still stubbornly tied to 50 percent of corporate transactions.
Indeed, there are plans or deployments in more than 40 countries around the globe to bring faster payments or real-time payments (RTP) into the fold. To that end, Bottomline Technologies Vice President of Product Management and Strategic Solutions Jessica Cheney said in a recent interview with PYMNTS, “The stage is set for the U.S. to fully embrace real-time payments for both B2B and B2C activity.”
Among the factors helping to promote the growth of RTP? Cheney said consumer expectations (akin to what she called a “grassroots movement” for RTP) have evolved, as evidenced by the uptake of P2P payment services such as Zelle and Venmo. Banks that roll out the same type of functionality to their corporate clients will have a clear competitive advantage in the corporate realm.
P2P is also finding increasing popularity in some of the dimmer corners of commerce. Long story short: It isn’t difficult these days to find a drug dealer or buyer who relies on mobile P2P payments for those types of transactions. It would seem unwise to use those methods for illegal transactions, but no matter the product, seamless payments appeal to all types of buyers and sellers.
Surveys and other types of reports are taking note of this apparent trend. For instance, according to one report from LendEDU, a student loan refinancing company, about 33 percent of millennials had paid for drugs via Venmo – and that was in late 2017. About a fifth, by comparison, had used Venmo for gambling. The report noted that “one interesting point is that any and all transactions made on Venmo will be on file, like a payment made with a credit card. Those who use Venmo for suspect transactions run the risk of leaving behind a paper trail that could come back to haunt them.”
No matter the realm, P2P payments keep on growing, and you can expect more expansion of that payment method in the coming months.