P2P Transaction Volume Up 25% as Firms Rush to the Space

Peer-to-peer (P2P) payments, a long-standing vehicle for transactions between consumers, has evolved recently into usage between merchants and consumers as well. The steady growth of P2P transactions for any purpose is illustrated in proprietary research created for the PYMNTS’ “Quarterly Payments Report: Mobile Wallets Gain Ground.” We found that between December 2021 and March 2023, the share of consumers making P2P payments in the 30 days prior to being surveyed rose from 28% to 35%. This rise represents a 25% increase in use over 16 months.

These findings mirror earnings and other reports released by financial services firms and P2P-focused FinTechs, hinting that some of this gain could be rooted in payments between consumers and merchants, along with other businesses. These transactions may range from purchases at restaurants and other establishments to paying independent contractors. Visa’s Q3 2023 financial results noted new payment flows, with commercial payments volumes gaining 9% preceding quarter. Much of this recent growth was driven by P2P platform Visa Direct, which saw transaction volume grew by 20% to 1.8 billion worldwide. In the U.S. alone, Visa Direct’s payments volume was up 6% year over year.

Some of this rise may be attributed to the company’s introduction and subsequent scaled rollout of its Visa+ P2P platform, set for general availability in early 2024, allowing P2P payments to be sent and received across different platforms. While this rollout may reduce friction for payments between consumers, the Visa+ platform could help merchants and other organizations by streamlining the number of P2P options a business needs to offer. Initially partnering with Venmo and PayPal and now including other Visa partners, the aim of Visa+ is to minimize friction when sending funds across differing platforms. As Head of Visa+ Vikram Modi explained to PYMNTS’ Karen Webster, this could have a direct effect on some consumers’ financial health. “We’ve found that there are plenty of gig workers and creators who are saying that they would love to receive a payment directly into a wallet account,” Modi said.

PayPal has also seen rising transaction volumes, up 13% in 2022 to an average of 51.4 per account. This increase continued into Q1 2023, where PayPal’s earnings results show users total payment volume increasing 2% to $91 billion. Much of this growth was attributed to PayPal’s branded checkout, which saw 6.5% growth over the quarter.

Zelle’s growth is substantial as well, with the number of transactions completed using the P2P payment service rising 29% year over year to 639 million during Q1 2023. Part of this increase may be attributed to increased adoption by smaller businesses, which accelerated over 2022, resulting 150 million payments through Zelle totaling $72 billion — up 77% over the course of the year and again rising 31% in Q1 2023 year-over-year. Growing beyond using the P2P platform for consumer-facing transactions, small businesses also use Zelle to pay their employees and rent, sending 133 million payments totaling $87 billion in 2022.

The general increased money mobility when it comes to P2P payments, along with the reported increased in commercial use by major sector players, may imply that P2P as a payment option is becoming more integrated into transactions involving businesses. No longer exclusively used to split a restaurant bill between friends, P2P may be coming into its own as a payment option for nearly all consumer-facing transactions.