Peer-to-peer payments, or P2P, require money-transfer apps that facilitate splitting a dinner tab or other bills with friends and family.
P2P applications like Venmo, Google Wallet, PayPal and Square Cash allow users to send one another money from their mobile devices through a linked debit card. And it is catching on quickly, even by digital-age standards. The service is increasingly available through banks and credit unions, and on social media networks like Facebook and Snapchat.
The number of consumers who have made at least one P2P transaction over the past 12 months by mobile phone or PC/laptop has grown from 74 million in 2015 to 84 million in 2016, a jump of 13.5 percent, according to Javelin Strategy Research.
P2P penetration has now surpassed 1 in 3 consumers (34 percent), Javelin’s report says. Javelin projects that P2P will reach 1 in 2 U.S. consumers by 2021, as 129 million people will have used a P2P service.
“To achieve almost 50% consumer adoption, Javelin sees several forces at play that will be catalysts for the P2P growth: voice-driven P2P services, higher usage of in-app payments and proximity payments, and greater availability of P2P,” Javelin states.
The voice-activation feature is key to expansion of P2P, as it will be for overall mobile banking.
“As voice-based banking comes to market, consumers will expect voice-based payment support as well,” says Michael Moeser, Director of Payments, Javelin Strategy & Research. “PayPal has already announced integration with Apple’s Siri for voice-based payments. This merely demonstrates a single steppingstone in the rapid evolution of P2P services over the coming 12 to 24 months.”
P2P service providers act like an intermediary. The user links his or her bank account, or a debit or credit card, to make the transaction as quick and smooth as possible. All of the major P2P systems are encrypted, meaning that your financial information is shielded. But like all applications, they may be vulnerable to hack attacks or scammers.