Consumer Appeal of Peer-to-Peer Payments Widens As P2P Services See Volume Climb

With PayPal Holdings Inc. promoting its fast-growing Venmo peer-to-peer payments service and rumors that Apple Inc. is eyeing the business, P2P transfers are starting to take center stage in the consumer-payments business. And now a new survey indicates the service is growing in appeal to consumers for a variety of uses.

Fully one-third of card-holding consumers are now using a P2P service, according to the latest Cardbeat survey from Auriemma Consulting Group, a New York City-based firm. The survey questioned a representative sample of 800 credit card holders. The most frequently cited purpose, at 94%, is sending money “far away,” indicating many users view P2P as an alternative to wiring money or even as a way to make online purchases, according to Auriemma.

“The ease of paying people far away suggests users may utilize P2P payments as an alternative to sending checks, money transfers, or providing account information to pay for goods or services,” says Jaclyn Holmes, an Auriemma senior manager who directed the survey, in a statement. At any rate, she says, P2P has come a long way from its original purpose, which was to make it easier for friends to split meal expenses. “It isn’t just used to pay for your share at dinner any more,” Holmes says, though 80% still cite splitting checks or bills as a reason for using the payment service.

The most widely recognized P2P service, according to the survey, is PayPal Me, at 27%, followed by Square Cash (17%) and Facebook (14%), which offers P2P payments through its Messenger app. Venmo came in fourth overall, at 12%, but 26% of the Millennials in the survey group said they were familiar with it. Venmo registered $7.5 billion in payment volume last year, up fully 213% from 2014. PayPal is now working on ways to let users pay for things in-app with their Venmo accounts.

The success of services like Venmo has not gone unnoticed among tech firms. Apple, which launched its Apple Pay payment service in 2014, is said to be working on a P2P application, though it remains unclear how it will work or when it might launch.

Online advertising, word-of-mouth, and social media are the ways most people find out about P2P services, according to the survey. “From a marketing standpoint, the very nature of P2P is that it encourages you to promote it to your friends,” said Marianne Berry, managing director of the Payment Insights group at Auriemma, in a statement. “Users, by necessity, often bring other new users with them. More than two-thirds of users under age 35 reported that they’ve encouraged friends to sign up for a specific P2P app.”

While nearly half of the P2P users linked multiple accounts to make payments, those who linked a card preferred a credit card rather than a debit card. Auriemma says this is “consistent with consumers’ preference for using credit cards for online purchases.”

In total, the mobile and online P2P market accounts for about $600 billion in annual volume, according to Aite Group, a Boston-based research firm.