Research from MasterCard serves to help validate the fact that the electronic payments industry still has room to grow even in a mature market like the United States. In their recent earnings call, CEO Ajay Banga spoke of the company’s belief that the market opportunity exists to move paper payments to electronic forms, especially for low value transactions.
The MasterCard report points to consumers’ lingering cash and check transactions as an indication of the unmet need in peer-to-peer payments, adding that banks could increase their total share of small-value transactions with P2P offerings. These P2P services would be most effective if offered through a bank’s mobile channel, according to the report.
We have noted the increase in investments being made in P2P services by leading financial institution development companies like Fiserv, FIS, First Data, and PULSE as well as FI-driven strategies like ClearXchange. The competition in this market between these companies, PayPal, and start-ups like Dwolla all indicate that the next stage of payment product development will be focused on point solutions that enhance overall account value.
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