Consumers consider mobile P2P a new social norm
A portion of consumers these days consider mobile person-to-person payments to be the new social "norm," and it's not just millennials who hold this view.
Bank of America's latest Trends in Consumer Mobility report shows that P2P adoption is strong across all generations. While millennials lead the charge, Gen Xers, baby boomers and even seniors use such services to varying degrees.
And of those consumers who do not currently use P2P, nearly half predict that they will use such services in the coming months, with baby boomers and Gen Xers at the front of the line.
This can only be good news for mobile P2P providers as competition increases in the industry.
Of course, Bank of America is coming to the forefront of mobile P2P due to its involvement with Zelle. The bank recently integrated some Zelle functionalities within its own online and mobile banking portals.
If you're unfamiliar with Zelle it could be because the banks behind the P2P service, once known as clearXchange, renamed the brand in August. Early Warning, which is owned by the banks participating in Zelle, did note at the time that clearXchange was never promoted as the official brand name for the service.
Nonetheless, it was clear at the time that the rebranding was done in an effort to better compete with the king of mobile P2P —Venmo.
Venmo gained popularity — particularly among millennials — between 2012 and 2014. Now the PayPal-owned mobile P2P app handles billions of dollars in transactions every year.
Traditional financial institutions see this as a threat, especially since Venmo users generally link their bank account to the app to fund transactions. And with banks also facing competition from the likes of Square Cash and Facebook Messenger, an increased focus on mobile P2P was inevitable — and needed.
Early Warning Services announced earlier this year that financial institutions in the Zelle network had processed more than 170 million person-to-person payments in 2016, totaling $55 billion in aggregated transaction value.
BofA CEO Brian Moynihan recently revealed the bank's success as part of the Zelle network.
"While still in its infancy, customers sent $8 billion in payments to our person-to-person apps in Q1, which is up 25 percent year-over-year," he said during the bank's Q1 earnings call.
Clearly, there's room for multiple players in P2P.
Going back to the BofA mobility report, there are a few interesting tidbits in it.
Consumers cited peer pressure as the second most common reason (48 percent) for using P2P. I found this stat interesting because it mirrors my own introduction to Venmo.
As more of my friends started to use the app, I found myself downloading it to pay people back for things such as tickets. In fact, I just used it last week to pay a friend for a ticket to a baseball game.
I also now use Venmo to pay my rent because the landlord has an account.
Another interesting stat from BofA's report is that P2P users are comfortable making surprisingly large transactions through apps such as Venmo and Zelle.
For some (26 percent), no amount is too small. For others almost no amount is too high. At least 18 percent of respondents are comfortable sending from $1,000 to $3,000 through a P2P service.
One last stat that stands concerns the notion of a pending cashless future.
Many respondents believe that children under the age of 10 will never use cash, checks or credit cards in their traditional form. Some 71 percent of respondents believe these children won't know how to write a check. Forty-two percent believe the demographic won't use physical credit cards.
Don't be surprised if some of those behaviors become the new normal as well.
Convergys (an independent market research company) conducted a nationally representative, panel sample online survey on behalf of Bank of America March 20–April 1. Convergys surveyed 1,005 U.S. adults (age 18-plus) who had a current banking relationship (checking or savings) and a smartphone. An additional 407 panelists also used a person-to-person payments service.
Will Hernandez / Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.