The Power of Peer-to-Peer Payments

Splitting a bill at a restaurant, sending your share of the taxi fare, getting an urgent request for cash to your child at university; these are just some of the convenient uses of mobile Person-to-Person (P2P) payments.?P2P payments have transformed the way people transfer money, offering convenience, security, speed, and accessibility.

The figures reflect just how popular they have become. The global P2P payment market was valued at USD 2.21 trillion in 2022 and is expected to hit around USD 11.62 trillion by 2032, with more than 8 in 10 (84%) consumers saying they’ve used a P2P service.

But in the rush to embrace the convenience of P2P payments, are people overlooking the potential risks, and should businesses be as enthusiastic as their customers?

P2P payments in a nutshell

P2P is a payment you make directly to another person using a P2P payment service. It enables users to quickly send funds while keeping their account details private; all that’s needed to send a payment is the recipient’s email address or phone number.

This method allows users to send and receive money without the need for traditional banking intermediaries, such as physical cash or conventional financial institutions. Popular P2P apps include PayPal,?Venmo,?Cash App?and?Zelle.

P2P payments are fast, convenient and seamless, but if you’re thinking it all sounds too good to be true, read on...

How secure are P2P payments?

It’s true that P2P money transfers boast robust encryption and authentication measures, and the trust instilled in these platforms has contributed to their widespread adoption. But as with other financial transactions, P2P payments are not immune to scammers and fraud – although frighteningly few are aware of it.?

Many consumers (48%) say they haven’t heard of P2P service fraud, yet P2P users are at risk of losing money to scammers, particularly those who use these services frequently.

Common?P2P scams?include:

• Phishing
• Unauthorised money transfers
• “Accidental transfers,” where a scammer sends money then claims it was a mistake, then the user sends the money back only to discover the funds were from a stolen source or fake account
• Impersonation or imposter scams, which often involve someone pretending to be calling from a business, government agency, bank or utility company to get access to money or personal information

Aside from the risk of these scams, just over a quarter (26%) of users have accidentally sent money to the wrong person, and most payment apps won’t reverse a transaction.

None of this has derailed the phenomenal growth of P2P payments. Despite any potential downside, P2P payment apps have grown so popular among consumers that businesses are catching on, with many starting to offer their own P2P payment options. So, should you be one of them?

Why tap into P2P payments?

For those businesses that don’t accept cards for smaller transactions, offering?P2P payments?can be a great way to increase sales.?But there are plenty of compelling reasons for many businesses to offer a P2P payment app:

• Businesses that accept credit or debit cards will see conversion rates increase when they offer customers the ability to pay with their peer-to-peer payment apps.
• Less cash will need to be stored on-site, which cuts down on fees associated with storing excess cash, such as security costs and insurance requirements.
• Adding P2P payment capabilities to your existing Point-of-Sale (POS) system requires minimal technical knowledge, as most apps can be integrated with common mobile POS software.
• Offering peer-peer payment options allows customers to pay with the preferred method, which makes them more likely to do so.

Many peer-to-peer payment apps are available, so do your research and opt for the one that best meets your needs, then tailor its marketing accordingly.

As P2P payment technology continues to advance, it’s expected to play an increasingly central role in the way people manage and move their money in the digital age. Offering it as a payment option could allow your business to tap into the mobile payment revolution, without updating outdated equipment or investing in new hardware that’s compatible with P2P payment services.

If you would like to discuss the benefits of a P2P payment offering further, get in touch today.

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