In one of my recent blog posts, I discussed the growing popularity of peer-to-peer (P2P) transactions in the U.S. Some experts predict that 2016 could be the year P2P payments go mainstream. For P2P payments to succeed with the majority of consumers, however, they must fulfill the following criteria:
- Be ubiquitous for senders and receivers: Consumers using Apple devices may need to pay consumers with Android devices or vice versa. P2P payments, therefore, must be available to both groups.
- Have minimal sign-up friction: When first signing up, potential senders must enter their names, locations, demographic information and financial information. Although this process only occurs with the first transaction, consumers are looking for a more streamlined process. P2P solutions that are simply add-ons to apps consumers already use, such as Gmail and Messenger, can even eliminate the need for a sign-up process altogether.
- Be immediate: When consumers hit the send button on a P2P payment, they expect the money to be on its way to the receiver. Ideally, that money will then be deposited in the receiver’s preferred account.
- Be available at no cost: Consumers expect payment transactions to be free. Providers of P2P payments will need to monetize outside of transaction fees.
Facebook and Google have set themselves apart from other P2P providers by adhering to the above guidelines. By making their P2P payments services available through Messenger and Gmail, Facebook and Google have successfully minimized sign-up friction for consumers. Many U.S. consumers, several million in fact, use Messenger and Gmail on a frequent basis. For these consumers, payment capabilities are simply an extension of an app they already utilize.
The dual-purpose functionality of both Messenger and Gmail are huge selling points for consumers. Neither of the apps are tied exclusively to payments and instead allow consumers to perform a variety of functions, such as sending messages, managing contacts and maintaining calendars. Both Messenger and Gmail can serve as one-stop-shops for consumers looking to communicate and make payments.
By tying their P2P payments services to social interactions, Facebook and Google have facilitated the ability to pay when it makes sense to do so in social situations. Say, for example, you and a friend are making plans to see a concert together. Your friend messages you saying he has purchased tickets for you both. Within your reply, you have the ability to pay him for your ticket. In this manner, communications and payments have come together in one streamlined process.
Consumers may not be exclusive in their P2P solution usage, however. They may use P2P options from Google, Facebook, their financial institutions and other providers. Having numerous payment options gives consumers the capability to complete transactions the second they remember, “I need to pay my friend.”