In a society where cash is becoming ever more elusive, making payments to friends for dinner or even settling up with your babysitter is as easy as clicking an app on your smartphone.
Person-to-person (P2P) electronic payments are going mainstream, adding convenience and accessibility in today's world. Users electronically send payments from their P2P or bank account directly to the recipient's P2P or bank account via text or email.
Millennial Turi Reeves of Boca Raton, Fla. says he can't remember the last time he paid someone with cash--no one whips out cash when it comes to paying for dinner or drinks anymore. "If one person ends up footing the bill, or if you owe someone money, you just tell them you will 'Venmo' them instead," Reeves says, noting the fact that hishis generation has acquired a new verb.
Electronic payments provider Venmo says P2P activity has exploded since day one, processing $2.5 billion of third party verification, up 174% over year-on-year. Adrianne Wright, communications lead at Venmo, says organic growth happened spontaneously.
"Simplicity has been a core focus at Venmo," she explains. "And since day one, we've seen this not only cause a rapid adoption among our users, but exceptional engagement between their transactions and their experiences. There's a number of opportunities in the social commerce space, and technology will only continue to grow, but there still has to be an ease of use for the consumer."What Exactly Is P2P?
Independent peer-to-peer payment companies like PayPal and Venmo, as well as financial institutions, offer electronic methods of personal payment.
Boston-based Radius Bank recently launched P2P application "Radius Pay a Friend" through fintech partner Acculynk. Radius's app functions like any other peer- to-peer transfer, but it is delivered through the bank instead of an external entity like Venmo.
"The biggest advantage with a bank-powered service like ours is that a Radius client can quickly send money to anyone, not just someone at Radius - all they need to know if the recipient's email address or mobile phone number," explains Chris Tremont, executive Radius vice president for virtual banking. "The recipient doesn't have to have a bank account with us to retrieve the money, although we'd love it if they did, nor do they have to setup a user profile like with PayPal to collect their funds."
Tremont says another advantage is the consumer can send funds without a fee using the Radius application. "Services like Venmo may assess a fee when sending funds with a credit or debit card, for example." According to Venmo's pricing guide, users can receive money free of charge, otherwise a 3% fee is assessed on credit cards and some debit cards to send money.
"A third advantage of using your bank for P2P is that it provides better personal financial management," Tremont adds. "From a tracking and budgeting perspective, it helps to have all of your income and expenses aggregated in one place versus having to visit various apps or websites to locate the information."