By Ryan Velez
Have you heard of an app by the name of Venmo? Even if you’ve heard the name, there’s a sizable chance that you haven’t made use of the mobile app, designed to send money to family and friends. Many millennials are making use of Venmo and similar apps to send money without going to banks, and The Network Journal reports that peer-to-peer systems like it may be the wave of the future.
The peer-to-peer, also known as p2p, payment system is a rising means of popularity that could potentially overtake cash and checks for people paying each other and even become popular with retailers and other businesses. It’s no surprise that Google, Facebook, and even some banks are trying to dip their toes in this pool in hopes of trying to get a piece of the market.
One major push in this direction is planned to come later this year. A coalition of some of the biggest banks in America is rolling out Zelle, a mobile and online money-transfer network that will let any customer of nearly every U.S. bank send money to customers of any other bank using only a phone number or email address. Analysts believe that banks getting involved, and the marketing that is certain to come with it, will draw online and mobile peer-to-peer payments to a larger audience. Even competitors could stand to benefit.
“We don’t see it as a winner-take-all scenario,” said Josh Criscoe, a spokesman for Venmo owner PayPal. “We welcome any effort to move folks to more digital payments and move toward the smartphone as the central point of financial life. The common enemy is cash.”
In this regard, even though p2p is on the rise, there’s still plenty more growth to be had. Americans made about $147 billion in digital p2p transfers last year, up from $100 billion the year before, according to a report from Aite Group. However, this is only 12% of the over $1.2 trillion that Americans paid each other the same year.
The same scale applies to Venmo and banks, even within the p2p space. Venmo users transferred $17.6 billion in 2016, far less than the $28 million transferred the same year through JPMorgan Chase’s Quick Pay service. Notably, though, many of these services make most of their transfers to other customers at the same bank on the bank’s website. Transferring between banks can be clunky, and not everyone is comfortable using a smartphone to handle their money.