January 19, 2016
Because of the absence of a common network for all the financial institutions, P2P transaction systems are of high importance in the United States when compared with other countries. Financial institutions and payments service providers are taking initiatives to build real-time payments network in the US to give a new direction to P2P payments. In the last five years, the US P2P payments market has seen a stupendous growth, driven by technology players, banking and financial institutions and startups
The report talks about the overall payments industry in the US, P2P payments market, key players in the P2P payments market in the US, latest trends in the P2P payments space and government regulations.
In the US, consumer preferences are inclined towards traditional payments networks, and cash still dominates the US payments industry. It indicates that there is a huge market for electronic P2P payments in the payments market. The chart below illustrates the consumer preferences for traditional payments networks or emerging electronic payments services:
P2P payments providers in the US can be broadly classified into two categories: B2B and B2C. Technology players like Apple and Facebook are trying to enter the P2P payments space from the consumer side while financial service providers like Early Warning and the Clearing House are partnering with existing financial institutions to expand their real-time payments network.
P2P payments value in the US is expected to grow at a CAGR of 25% until 2020.
PayPal, Venmo, Square Cash, Dwolla, Google Wallet, Facebook Cash and Snapcash are some of the key players in the B2C peer-to-peer payments market. PayPal is the dominating player in this space with more than 50% of the market share.
In B2B peer-to-peer payments market, Fiserv Popmoney, clearXchange, FIS People Pay, CSI, ACI Worldwide are some of the key players with FIS People Pay, clearXchange and Popmoney leading the P2P payments space on the B2B payments.
Payments industry players like Apple, Google wallet and Oink are getting into P2P payments and vice versa, players from the P2P payments industry such as Venmo are getting into the payments market.
More than 30% of the P2P transactions are used for paying rent bills while around 15% are used to share bills. The average P2P transaction size is higher because of the possibility that some users may be using P2P payment services for fund transfer between their different bank accounts
Mobile P2P payments are growing more rapidly than desktop P2P payments. P2P payments service providers are moving towards mobile by offering instant transfers using contact details of consumers.
Technology players and social media products are foraying into P2P Payments. Social media platforms like Facebook and Snapchat have already entered P2P payments market by providing services that enable users to transfer money to their peers.
Catering to the increasing demand for electronic payments, P2P payments are rapidly moving to real-time payments. Top banks in the US are taking initiatives to establish a real-time payments network to enable instant money transfer services. Unlike many of the developed and developing countries, the US still does not have a real-time payments network. There is no specific body monitoring P2P transactions in the US. Like other transactions, the P2P payments transactions are regulated and monitored by the Federal Deposit Insurance Corporation, the Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) and state-level government agencies.