How did you split the bill the last time you shared a meal with friends? Did you all pitch in cash? Did you get separate bills? Or, did you easily, like the many Americans who have embraced the convenience of peer-to-peer payment (P2P) services in recent years, open an app, type in an amount, and hit “Send”?
The global P2P market has grown considerably over the past few years, with the United States now dominating usage. Consumers across the US are sending billions of dollars through digital apps, from both traditional financial institutions and fintech options. Estimates indicate that the US P2P services market will grow at a compound annual growth rate of over 20% by the end of 2020 and reach a valuation of $381 billion dollars by 2022.
To understand how Americans truly feel, behave and think about these P2P tools, we have leveraged our Maru/HUB platform to engage over 9,250 consumers annually, using a variety of techniques to capture robust insights. This MoneyScreen product makes data available for deep exploration on Maru/HUB’s interactive data visualization platform.
Pandemic-triggered growth of peer-to-peer payments
In January 2020, MoneyScreen, reported that about half of Americans were using mobile payment apps to send money to friends and family. Then, at the beginning of the COVID-19 pandemic in March, with stay-at-home and no-contact orders in place, online commerce exploded.
Not only did the pandemic create upwelling shopping activity online, but it also has dramatically increased P2P app use, as fears of handling cash, touching credit card machines, and potentially some hesitation to pile charges on credit cards persuaded previously reluctant consumers to try one of the many popular apps.
The safety and convenience of these apps were embraced as an effective payment method for everything from virtual guitar lessons to thanking family members for dropping off much-needed groceries. A mid-June article by Pymnts.com reported that the pandemic acted like “throwing lighter fluid on a fire that was already burning”, and that new P2P user growth increased by 19% from May to June 2020, with transaction growth increasing by around 9% per month. Even FI-based P2P services like Zelle, traditionally more popular among older adults, saw an uptick in adoption and usage by younger customers.
Barriers to greater P2P app adoption
As is the case with any innovation, various barriers impact widespread adoption of P2P payment apps. The number one barrier reported in MoneyScreen is the fear of not knowing how to use the available apps, as mentioned by 40% of non-P2P users. The 18-34-year-old non-users are also worried about the utility beyond sending and receiving money among family and acquaintances (three-in-five), as they are concerned that it won’t be accepted where they shop. Further, those in this young cohort who are on the fence about adopting P2P tools are most worried that P2P isn’t a secure payment option (two-in-five). The instantaneous nature of sending money via a P2P app, one of its biggest perks, is also what makes it most problematic.
In September 2020, the Better Business Bureau released a list of scams/fraud that consumers should be aware of when using P2P services. These include scammers using stolen or fake payment methods or canceling payments at the last minute, overpaying for items using these fraudulent payment methods and then demanding a portion of the payment back, and spoof emails leading naïve consumers to share a password or otherwise sensitive personal information.
Users across P2P cash apps are encouraged to send money only to those that they personally know, as well as to link the money transfer app to a credit card for added protection, to check accounts to ensure the transaction was successful, and to be sure to have the right number for customer service if a call is needed.
The future of P2P payment services
With the pandemic still a very real concern and a second wave growing, as temperatures cool off and people are forced into closer quarters, emotions are running high. With the amount of anxiety, fear, and stress present, the decisions we make right now are unlikely to be purely rational. Our emotional posturing will result in real behavioral changes, whether we realize it or not.
What P2P methods will continue to grow, what additional security measures are implemented, and will usage and popularity wane once the pandemic subsides, are all crucial to track.
This is why at Maru, we use MoneyScreen on Maru/HUB, to continuously capture data and share insights on not only what Americans say about different payment tools, but how they use them, and what features implicitly motivate an increase in usage. This is fundamental to uncovering insights and opportunities that deliver real competitive advantage.
Contact our team today to learn more about our research and how it can streamline your innovation process.
This article was co-authored by Maru/Matchbox’s Jaime Dreyfus Aliberti, Senior Vice President, Financial Services and Lindsay Clark, Research Manager, Financial Services.