Until recently person to person (P2P) payments were on the fringe of the payments space, but according to a new report by Bank of America this is changing quickly. Their report Trends in Consumer Mobility found that 36 percent of adults in the U.S. are now using some form of P2P payment services. This number shoots up to an astounding 62 percent when only considering millennial consumers.
Add to this the fact that 45 percent of those who said they don’t use P2P services plan to start in the next year and one thing becomes clear; P2P payments is a major trend and it’s going to be expanding into the middle east sooner than later.
What are P2P Payment Services
Person-to-person payments (P2P) is a blanket term for any online technology that lets customers transfer funds from their accounts to another individual’s account without the need to visit a bank or write a check. The technology usually uses the internet or a mobile application to connect two individuals and process a transaction.
The technology that allows P2P payments has been around for decades, but the real obstacle has generally been user adoption. Today thanks to the proliferation of ecommerce and smartphones, more people than ever are comfortable with sending and receiving money electronically.
What’s Driving P2P Adoption
The reality is that technology is proving to be the key driver of P2P transactions. Devices and networks are developing faster than ever before leading consumers to look for innovative ways to make their financial lives simpler.
According to the report 68 percent people using P2P services said they began using it because it was more convenient and saved time. Beyond convenience, the other factor driving adoption is (not surprisingly) peer pressure. 48 percent of report participants said that pressure from their friends played a role in their decision to adopt the new technology.
P2P Changing the Way People Pay Each Other
P2P payments are doing more than just making transaction more convenient, they are changing the way we think about lending and paying back friends. Bank of America’s report shows that that 69 percent of adults pay others back within the same day, and 33% settle with friends in under an hour.
Another area where P2P has exploded is managing shared expenses across families and roommates with 45 percent of people paying bills such as utilities and telecom with P2P. This technology also shines in group gift, travel and dining situations.
As technology continues to evolve we expect that P2P payments will evolve right alongside it and this has some interesting consequences. According to the report, the majority of respondents believe that children younger than 10 will never use cash, checks or even credit cards, at least in the form they exist in today.
Do you think cashless and P2P payments are the future? Do you currently use any P2P services yourself? To learn more download our State of Fintech Report. Let us know your thoughts in the comments below and be sure to follow us on Twitter for all the latest payment trends.