Peer-to-Peer (P2P) payments apps help users transfer funds quickly, conveniently, and securely through mobile devices. P2P adoption is growing quickly, and Merchants & Marine Bank customers should know the pros and cons of this kind of financial technology. You may have heard of Venmo, the industry leader with 57.5% market share. There’s also Zelle, a fast-growing platform developed by banks, and other players like PayPal and Square’s Cash App. It’s expected that by 2023, more than $1 trillion will be transferred on these mobile payment apps.
Zelle, designed and embraced by some of the country’s largest banks, is viewed by industry observers as the most secure among mobile P2P players, especially with specific transactions like paying rent. Non-bank platforms like Venmo, a digital wallet service owned by PayPal, Cash App, and lesser players like Google Pay and Facebook Messenger also transfer funds via browser on a mobile device or tablet.
There may be risks inherent to a particular app’s design, such as users forgetting to transfer money into their FDIC-insured accounts after receiving funds from someone else. Or an app may have a risky default setting that makes transferring money more “social,” such as your transactions with friends and loved ones being left visible to the public. Still other risks are universal to banks and financial technology, such as fraud and scams.
Evidence has shown that when it comes to fraud and security, P2P apps may not be foolproof. Some users have complained of funds disappearing without explanation. Others have difficulty getting refunded after a mistaken transaction, if using funds from the app and not from a bank.
Even with these concerns, P2P apps continue to gain momentum in the global marketplace and here in America. Analysts expect the market to grow to over $785 billion in transaction volume this year and hit that trillion-dollar threshold in 2023.
Moving forward, differentiation may be the determining factor for each app’s continued growth. While some see Zelle as best for instant transfers, Venmo may be best for friend groups. Cash App has become known as best for investors, while PayPal’s, the oldest P2P player, continues to hold its own in ecommerce. Finally, Google Pay and Apple’s Pay Cash remain enticing for those using digital wallets.
Any time you are using financial technology that involves linking a credit card and especially your bank account, you should be aware of not just the benefits of the technology, but the associated risks. The team at Merchants & Marine Bank is here to help you navigate the changing world of financial technology and help you make the right decisions for your financial well-being.