December 9, 2015
After receiving great feedback for our last LTP9 report on the biometric authentication in the payments industry, we couldn’t wait to release the LTP9 report for P2P payments (person-to-person payments). The reason we chose P2P payments is because of the significant increase in the volume of P2P payments reported by leading players like Venmo, recent efforts put by top US banks and financial sector giants like FIS in the industry to execute real-time payments, and partnerships, mergers & acquisitions seen in the segment in the past couple of years. Financial institutions including banks are broadening their range of services on the way to becoming leaders in the FinTech industry while tech companies like Google, Facebook and Apple are entering the space. However, this leaderboard will give you an overview of the existing players in P2P payments and how well each of them is performing.
P2P payment, also known as person-to-person payment or peer-to-peer payment, has been a hot topic in the FinTech industry since the past five years. After an in-depth primary and secondary research of nearly 29 companies that included startups like Venmo, early players like Western Union and financial services providers, we shortlisted the top 15 companies in the market on the basis of numerous elements like market potential, past and present performance, popularity amongst different target segments and other quantitative and qualitative assessments necessary in the payments industry.
We further continued with a comprehensive and careful analysis to create our LTP9 leader dashboard for the top nine P2P companies in the industry. This filtration of nine companies from 15 was based on the three parameters put together by our in-house industry experts. These parameters are Focus, Momentum and Impact. While evaluating these companies, we considered all possible factors including transfer fee, transfer time, availability on apps and/or website, the number of users, the volume of transactions, market share, potential mergers & acquisitions, and drawbacks of each company. We also considered other critical elements such as the security associated with transfers by each company, the technology behind transfers, the social media element for each company, and views of opinion leaders and key industry stakeholders.
The LTP Canvas Report includes the raw data, industry overview & trends, US P2P payments market analyses, and comprehensive insights & understanding for the companies in the P2P payments segment. It also talks about the process through which the companies have been given their respective ratings—as per the framework—to arrive at the P2P Payments LTP9.
Highlights of the report:
- The US P2P payments space is broadly divided into three categories. P2P payment services are being offered directly to the end-user or to the end-users via financial institutions or both via financial institution and directly to the end-users.
- In terms of total payments value, PayPal, the early mover in this space is leading the segment in the B2C market while clearXchange is leading the B2B market by reaching around 7500 financial institutions and their 100 million online banking customers.
- Amongst the top nine companies shortlisted, we analyzed that the ninth position will be taken over by a tech giant in the US. Given the fact that tech giants have entered the space, the existing companies in the space do not have enough impact to be a part of LTP9. We predict Facebook or Apple to take that place as Facebook launched P2P payments few months ago while Apple filed a patent application titled Person-To-Person Payments Using Electronic Devices to the US Patent and Trademark office and is in talks with banks in the US for P2P payments.
- P2P payments will face fierce competition in the next five years with two big announcements from FIS and its partner The Clearing House and clearXchange and its partner Early Warning.
- The report includes a forecasted increase in total P2P payments volume from 2016 to 2018 based on existing industry announcements.
Brief Profiles of the Shortlisted "LTP9 P2P Payments Category" Companies
PayPal: PayPal is a global online payments company with existence in 203 markets and 169 million active customer accounts. Almost half of its customer base is in the US. PayPal’s P2P platform is one of the oldest in the industry. PayPal enables free money transfer between two PayPal accounts. Withdrawing money from your PayPal account is free of cost. In September 2015, PayPal also launched its new peer-to-peer service, PayPal.me in an attempt to make person-to-person payments simpler and social.
Venmo: Venmo is a payment platform used for peer-to-peer or person-to-person payments within the Venmo mobile app or within Venmo’s website. One can link their Venmo account to bank accounts, debit cards or credit cards. The money received via Venmo is stored as Venmo balance and it can be transferred to the bank account at any moment. A user can deposit the Venmo balance free of cost via the app or the website to his or her bank account. Andrew Kortina and Iqram Magdon-Ismail, two freshman year roommates at the University of Pennsylvania in 2001, founded Venmo in 2009. Venmo was acquired by Braintree in August 2012. PayPal then acquired Braintree in September 2013.
Google Wallet: In September 2015, Google re-launched Google Wallet as a P2P payments mobile app. The old version of Google Wallet had let users use tap-and-pay using their phone. However, Google rebranded Google Wallet as an exclusively P2P payments app while it let Android Pay take care of the tap-and-pay NFC feature. While NFC didn’t go well with Google Wallet, P2P payments seem to be bringing success to Google Wallet. In fact, Google Wallet has more users than Square Cash on Android’s Play Store.
Dwolla: Founded in 2008, Dwolla enables real-time payments by offering a real-time payments system and payments network to participating individuals and financial institutions. In June 2015, Dwolla removed all the fees on P2P transfers with monthly limits for each account. While Dwolla has been somewhat popular on the B2C side, it seems to gain rapid momentum on the B2B side. In April 2015, BBVA Compass, a $75-billion bank with 688 branches in the US, launched real-time fund transfer using Dwolla’s payments system. Dwolla has also recently partnered with financial institutions like global payments company Seamless and mobile banking and payments service provider with 800+ financial institutions, mFoundry.
Square Cash: Square Cash is a free P2P payments platform owned by Square Inc., a credit card processing and payment solutions company for businesses. Square Cash is unique in a way because it has a feature called Cashtags. With cashtags, one can easily make a P2P transfer using the link: www.cash.me/$cashtag. The Nearby feature within the app allows a user to send money using Bluetooth low energy (BLE). In March 2016, Square Cash also announced a peer-to-peer option for small businesses to accept payments.
PopMoney by Fiserv: Popmoney is a P2P payments platform for consumers and a P2P payments integration solution for financial institutions. Popmoney P2P payments services for financial institutions are provided by Fiserv Inc. More than 2400 financial institutions are using Fiserv’s Popmoney services to enable P2P payments for their end customers. These 2400 financial institutions enable around 70 million US online banking customers to access Popmoney’s P2P payments service. The B2B offering by Popmoney enables financial institutions like banks and credit unions to incorporate P2P payments within their online banking and mobile banking system. The B2C offering is directly available for consumers to use on popmoney.com or Popmoney’s mobile app where users can send, request or receive money using an email or mobile number.
clearXchange: clearXchange is the first P2P payments network created by a few of the biggest banks in the US that included Bank of America, JPMorgan Chase, Wells Fargo, US Bank and Capital One. Recently, it was announced that BB&T Group and PNC Financial Services Group will join the clearXchange network as Early Warning, a risk management collaboration owned by Bank of America, BB&T, Capital One, JPMorgan Chase, BB&T and Wells Fargo, will acquire and own clearXchange. Around 7500 financial institutions are a part of clearXchange’s network and more than 100 million online banking customers in the US can access clearXchange’s P2P platform.
FIS’ People Pay: One of the leading global banking solutions provider, FIS, entered the P2P payments space in 2013 with its product People Pay, which uses PayNet, a real-time payments network owned by FIS and NYCE (the electronic fund transfer switch owned by FIS to help financial institutions make P2P payments available to their end customers). While FIS may be offering its P2P payments service to at least 40% of the 3000 financial institutions clients it has in the US, the biggest news from FIS in the P2P payments space came earlier in Q4 2015. FIS also announced a partnership with The Clearing House (TCH), the oldest banking association and payments company to execute an omnipresent real-time payments system in the US.
A lot is going to happen in the P2P payments space in the US in 2016 and 2017. With the US’ top banks coming together to form a large real-time payments network, Venmo’s future might be in danger. Will a real-time payments network erase the line between P2P payments and bank money transfers in the US soon? On the other hand, FIS and The Clearing House are warming up to compete with clearXchange. While residents of the industry are taking quick steps one after another, aliens from the tech industry are trying to enter the space. Facebook launched P2P payments in the US a few months ago and is silent about it right now. Does the silence indicate the big storm following it? Google and Apple’s competition will be soon seen in the P2P payments space.
To study the in-depth numbers in the space and what P2P payments in the US will look like in the next five years, buy this report at an introductory price of $750.