pcmag recently published a tutorial on how easy it is to send or receive money using Gmail on Android. Because of the ease of use of many of the person-to-person (P2P) payment solutions, the P2P market is set to explode over the next couple years. Google Wallet, launched in 2011, was not the first entry into the P2P market, according to Mercator Advisory Group Debit and Alternative Product Advisory Service Director Sarah Grotta, who points out in a recent report, U.S. Market Forecast for P2P Solutions, 2017–2021, that ZashPay and Venmo released P2P solutions in 2009. However, Google and the other vendors clearly recognized the opportunity of P2P payments. Mercator Advisory Group predicts that P2P payment volumes will grow at a rapid pace as a replacement for cash and checks, rising from $168 billion in 2017 to $812 billion in 2021.
As the P2P market continues to boom, financial institutions will need to consider how they are going to support their customers desiring P2P services. Various options are available in the marketplace. One is Early Warning’s Zelle platform, which according to Mercator Advisory Group, is already embraced by 60 institutions representing over 50% of all U.S. checking accounts.
If the forecasted growth of P2P is not enough to convince you of the urgency that financial institutions need to take with their P2P strategy, there is also consumer data showing demand. Mercator Advisory Group CustomerMonitor Survey Series found in 2017 that 57% of adults had used P2P services in the past 12 months and 57% reported that they use their debit card. This shows that consumers consider P2P payments a crucial part of the banking services they expect to be provided by their financial institution. It is important to note, however, that as Sarah Grotta points out in the report cited above, 55% of financial institutions currently don’t offer a P2P solution. They cite the reason as slow adoption rates of the past and the expense of implementing and maintaining the service. But as competitors like PayPal, Square, Apple, and Google continue to offer bank-like services, financial institutions are going to need to act quickly to make sure these fintech companies don’t eat their lunch.