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  Getting a Slice of the $86B P2P Pie
Getting a Slice of the $86B P2P Pie
Business Insider estimates that P2P mobile payments could represent $86 billion in 2018, but as I speak with community bankers from across the country, the common refrain I hear when I broach the topic of P2P is, “Why does my bank need a P2P solution when there is already an abundance of P2P solutions in the marketplace?”

While it’s true that consumers have a number of P2P options, as I referenced in my last blog post, the majority of consumers prefer to use financial solutions offered by their bank and would gladly make the switch. There is a twofold reason for this: security and privacy. Consistent with federal and state laws and regulations, banks have trusted procedures for protecting, storing and accessing customer data and are routinely examined to ensure compliance. Many nonbank P2P apps are more social than secure. They can access social media sites and features on the device such as cameras and contacts, in addition to accessing bank account login information. Some even post customers’ payment activities on social media sites. Nonbanks offering financial services are subject to the same laws and regulations as banks, but not the same oversight and examination.
Let’s take a look at what I consider some of the best-in-class P2P solutions in the marketplace today.
Easiest enrollment – Square cash: While enrollment in Square cash is one of the quickest and easiest to complete, the service has limitations. Square cash holds your money in your Square cash wallet until you request the funds be transferred to your bank account. Transfers take one to two business days, unless you are willing to pay a 1 percent fee for immediate availability.
Greatest flexibility – Paypal: Without a doubt, Paypal has the most flexibility and the most users. In recent months, Paypal’s partnerships with banks and the card networks allow it to offer the fastest availability without a fee (debit card). However, users do not have to transfer their money to their bank account (a process that can take at least a day). They can simply leave it in their Paypal account and use it for purchases.
Speed – Venmo: Owned by Paypal and geared toward Millennials, who are adopting Venmo at double digit rates, Venmo is easy to navigate. Sending money is fast and it sends messages in social media about payments giving it appeal with Millennials. (This is why it is coined a “social money app.”) However, it still takes one to two business days for a Venmo transfer to be available, and it requires the user to immediately surrender the login credentials to their bank account.
Biggest potential game changer – Zelle: According to Early Warning Systems, the bank owners of Zelle (short for Gazelle), their app will represent 60 to 70 percent of the U.S. DDA market. This could be the first P2P system with ubiquity thanks to the integration being built by FIS, Fiserv and Jack Henry, eliminating two of the biggest adoption hurdles – user fees (Zelle is free) and interoperability of existing apps. Couple that with near-time and eventually real-time payments, this one is sure to disintermediate the fintech solutions.
Of course, there are many other P2P solutions on the market – Dwolla, Amazon, Snapcash, Google and Apple Pay, to name a few. P2P solutions are expanding into e-commerce, m-commerce and small business applications, which should further increase their popularity.
Now is the time for community banks to embrace P2P. Even if your clients aren’t asking for it, they will use it, and they will thank you. Next issue we will dive into The Clearinghouse’s Real Time Payments system, the first new payments system “rail” in decades.■

Tina M. Giorgio is president and CEO of ICBA Bancard, the largest national credit card program exclusively for the nation’s community banks. She joined the company in 2016 and focuses on developing strategies to leverage the brand among current and new customers.

Posted on Friday, December 01, 2017 (Archive on Thursday, March 01, 2018)
Posted by Scott  Contributed by Scott


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