Eye on P2P: Link-Up Opportunities With Prepaid Cards; PayPal’s Dominance

Two recent studies have produced some interesting insights about person-to-person payments. One spells out the similarities among users of prepaid cards and P2P services. The other shows just how strong PayPal Holdings Inc.’s hold in money transfers and P2P and other payments is.

The findings about prepaid and P2P come from a March poll of 800 debit card holders by New York City-based Auriemma Consulting Group in partnership with the Network Branded Prepaid Card Association. The study, results of which were released Thursday, highlighted use cases for P2P and prepaid services among the banked population.

Auriemma found that 42% of the study group have used a P2P service, and 36% have used a reloadable prepaid card. Majorities in both user populations were male, college-educated, parents of minors, and reported annual household incomes of greater than $50,000, although the P2P group’s majorities were larger.

“Our previous research tells us that those who use P2P payments are about twice as likely to currently hold a prepaid card than their non-using counterparts,” Jaclyn Holmes, director of ACG’s Payment Insights unit, said in a statement. “This cross-section of users could create increased engagement with prepaid cards should they be accepted by P2P payments.”

In fact, users of both prepaid cards and P2P services value comparable aspects of the payment methods, notably security, usefulness for budgeting, and convenience. Some 44% of prepaid card users said the most beneficial aspects of such cards are that they don’t link to a bank account, offer a secure payment method (33%), and help with budgeting (also 33%). Strong majorities also believe prepaid cards are more secure that credit, debit, or store cards.

Regarding P2P payments, 88% of users believe they’re secure and even 65% of non-users believe P2P is secure. ACG added that a small group of P2P users also use such services for budgeting. Not surprisingly, more than 90% of P2P users gave the payment method high marks for convenience such as paying people far away and speed for clearing faster than checks, and 87% of users cited the convenience of splitting tickets or bills.

The findings suggest that prepaid card issuers could get more usage of their products if they can find ways to link them to P2P services.

“It’s safe to say we aren’t moving towards a cashless society, but we are certainly using less cash than before,” Holmes said. “By themselves, P2P payments and prepaid cards provide more flexibility, convenience, and a greater sense of security.”

While the recent study focused on banked consumers, a future study may focus on the unbanked population, ACG said.

Meanwhile, Washington, D.C.-based research and media firm Morning Consult LLC released a study that found that 27% of 1,996 respondents polled last week said they use PayPal a few times a year, and 15% said they use it once a month. The poll also asked about PayPal’s Venmo P2P service, which is particularly popular among younger adults. Some 11% of Millennials surveyed reported using Venmo several times a day.

PayPal this week reported that its second-quarter payment volume grew 23% year-over-year to $106.4 billion.