Person-to-person payment services increasingly are becoming available, but most consumers are using them to substitute check use to pay bills to small businesses instead of to exchange funds with other individuals, such as when splitting a dinner check, new research suggests.
Addressing the discrepancy between how banks position P2P payments and how consumers use them is important to the market’s growth, Mercator Advisory Group notes in a December report. “This is an example of a bank introducing a product and consumers finding an interesting way to use it, so they maybe have to adjust their marketing around it,” writes Mercator senior analyst Ben Jackson.
Banks and credit unions typically offer P2P payments as part of their online banking service and generally do not charge for them, the report notes. They view P2P as “a way to encourage customers to come to their websites, use online banking and bill-payment services, and as a means of migrating checks to electronic payments,” Jackson tells PaymentsSource.
Banks have a history of introducing products for free, but they “may be missing an opportunity to bring on a new revenue source” during a time when they are losing fee opportunities because of overdraft-fee and debit-interchange legislation, Jackson contends.
Some 7,075 financial institutions offer P2P payment services, Mercator estimates in the report. During the first six months of 2010, consumers made 1.29 million P2P transactions through financial institutions valued at an estimated $539 million, Mercator says.
In its evaluation of potential revenue opportunities for P2P payments, Mercator estimates that the market could grow to more than 3 million transactions per year by 2015 from roughly 2.9 millions in 2010. Jackson points out that those numbers only represent charitable contributions, pet care, rent, child care and landscaping (see chart).
In terms of revenue for those segments, Mercator predicts that, at $1 per transaction, the industry could net $2.3 million in 2015, up slightly from $2.1 million in 2010.
What do you think about this? Send us your feedback.
