Peer-to-Peer Payments Tech Levels Playing Field for Private-Party Car Sales

Buying or selling a vehicle is the second-largest transaction most consumers will undertake — second only to a house — yet the process has many potential pitfalls when it is done as a private-party sale.

Is the cash counterfeit? Do you want to carry around that much cash anyway? Has the cashier’s check been forged? Is the seller the legal owner of the car? Has the loan been paid off?

For that reason, many consumers go to a dealer to buy, sell or trade a car, paying more or getting paid less than they would in a private-party sale, but avoiding those problems.

“Those are the most common problems, and it deters a lot of people from the private market,” KeySavvy CEO Andrew Crowell told PYMNTS. “People give up, or they’re deterred from dealing with that risk, so they trade their car into the dealership, they take a much lower price and they effectively leave thousands of dollars sometimes — depending on the price of the car — on the table.”

Leveling the Playing Field

KeySavvy aims to solve these problems with its peer-to-peer (P2P) payment app for private-party sales of used cars. For sellers, it verifies the buyer’s identity and ensures payment. For buyers, the app verifies the seller and guarantees the buyer gets the title and can register the vehicle. For both, it automatically generates the required documents.

The company was formed in January, and the site went live in April. On June 16, KeySavvy and auto repair network RepairPal announced a partnership in which car sellers and buyers can access RepairPal’s certified shops for pre-purchase vehicle inspections and ongoing automotive services.

“Technology exists and it’s getting better, especially in the payment space, to just do a lot better and essentially level the playing field,” Crowell said. “That’s our mission. I want people to be able to make the best financial decision for them and not worry about the risk that they may be taking on.”

Making the Private Market More Efficient

KeySavvy is a licensed dealer, so with the consent of the seller, it can access data and pull records from the department of motor vehicles that a consumer would not be able to get. With that and other customer authentication tools, the platform can verify that the seller owns the car, that any lienholders have been paid off, and that both the buyer and the seller are who they say they are.

“We’re able to do that as a dealership, but unlike a traditional dealer, we don’t own the car,” Crowell said. “We’re leveraging that in order to make the private market more efficient.”

The platform also facilitates payment by the customers’ choice of credit card, wire transfer or automated clearing house (ACH) transfer.

Each of the three payment methods has its own pluses and minuses in terms of convenience and cost, Crowell said. Credit cards come with a fee. Wire transfers often have a smaller fee and move the money the same day during business hours but add a delay on weekends and bank holidays.

“ACH typically is the most common payment method for us,” Crowell said. “It’s very fast and very convenient.”

Serving a Market of 18.7M Vehicle Sales Annually

KeySavvy charges a transaction fee for buyers and doesn’t charge sellers. It’s testing different fee models.

Despite the potential pitfalls of buying and selling used cars, there were 18.7 million private-party sales in 2021, accounting for 48% of the used car market, Crowell said.

With the current shortage of new vehicles, the demand for used vehicles is high. Crowell said he has listed cars for sale and has had many dealers reach out and want to buy them because they’re sourcing cars for resale.

“There’s a massive number of transactions happening today,” Crowell said. “We’re positioning KeySavvy as just this transaction platform that can partner with all of the marketplaces and essentially solve the fraud and transaction problems that they have.”