With payments being vital to achieving top-of-wall status, it’s not surprising that P2P and real-time payments are increasingly gaining marketshare. Just recently, Early Warning’s Zelle app announced they had processed 100 million P2P transactions worth $28 billion in Q2 alone. eMarketer projects that the P2P market will each 82.5 million people in 2018, equating to more than 40 percent of U.S. smartphone users. And by 2021, the total transaction volume of mobile P2P payments may top $300 billion.
Credit unions and other financial providers are quickly catching on, recognizing the need to offer faster payments as one of several payment options for their members. CO-OP enabled P2P on our Sprig and CO-OP mobile apps through RealPay and are currently beta testing an integration with Zelle. Particularly for millennials, the option for P2P is fast becoming an essential part of the mobile banking experience.
Yet, for a number of reasons – sporadic availability, security concerns, lack of consumer awareness – P2P and real-time payments have experienced some lag in mainstream adoption.
This week, we look at current state of the P2P and real-time payments space – what consumers and merchants think of it and what the barriers to mainstream adoption are.
Banks, Billers, Merchants See Real Benefits to Real-Time Payments
While consumers are still skeptical about real-time payments, banks and merchants are ready to jump in. According to a new study by ACI Worldwide, 86 percent of banks, 82 percent of billing organizations and 78 percent of merchants expect to see improvements in their customer service as a result of real-time payments. Just over half of survey respondents reported that they plan to increase IT budgets for payments-related projects in 2018.
Future-Proofing Faster Payments
The concerns around electronic payments was revealed when a service outage on the UK’s Faster Payments platform lasted over four and a half hours. To make matters worse, it took over two days for the platform to process the 8,000+ payments in the backlog. Mercator’s Sarah Grotta attributes the outage to the platform’s inability to handle the volume of transactions coupled with debilitating regulatory requirements brought by the recent PSD2 and GDPR guidelines.
TRENDING: Real-Time Payments Networks for Real in Retail?
We have heard a lot about how contactless and other frictionless payments are quietly being beta-tested in retail environments. Many consumers love the idea of instantly paying for items without having to pull out their wallet or even their phone. But instant retail payments also introduces new complexities, such as: what happens when the customer wants a instant refund? And would consumers be okay with payments being deducted instantly from their accounts?
Tokenization Can Tame the Beast of Real-Time Payments Fraud
When fraudulent transactions happen in real-time, that money is gone in an instant. Indeed, the escalating pace of fraud has been a major impediment to the growth instant payments, with credit unions in need of a way to detect fraud in a matter of seconds rather than days. The same tokenization process that secures mobile transactions could be a key to safer real-time payments.
Instant Payment Apps Grow Up. They’re not Just for Millennials Anymore.
When it comes to the newest, most cutting-edge apps, millennials and the younger generations are obviously the first adopt them. But that doesn’t mean the older generation isn’t quickly catching up. A recent Zelle survey found that over 69 percent of Gen X and 51 percent of Baby Boomers are already using P2P apps at least once a week. Now someone needs to do some further research and find out how many of those P2P transactions are parents fulfilling money requests from their kids…
Contact us to find out how CO-OP can help integrate P2P and real-time payments seamlessly at your credit union.