Posted by Mark Brousseau
Historically, cash and checks have dominated as the primary means of settlement for person-to-person (P2P) transactions, but that has the potential to change rapidly according to new research released by NACHA and eCom Advisors in partnership with FIS and PayPal. The research was unveiled this morning at a breakfast press conference at NACHA’s PAYMENTS 2010 Conference at the Washington State Convention Center in Seattle.
“Financial institutions and solution providers are increasingly seeking to leverage the ACH Network to enable their retail customers to conduct electronic P2P payments,” stated Janet O. Estep, president and chief executive officer of NACHA—The Electronic Payments Association. “This research adds to our understanding of consumer demand for this payment service.”
The February 2010 survey, completed by 1,180 active online banking consumers in the U.S., was designed to test consumer reaction to two new concepts. The first concept was using a P2P payment service offered within the online bill-payment applications of financial institutions. Nearly half (48 percent) of active online banking consumers are likely to use such a service, according to the research.
The research also investigated consumer interest in several different scenarios for P2P payments offered by financial institutions. Results concluded that:
… 33 percent of consumers are likely to use P2P payments to send money to a son or daughter at college;
… 31 percent are likely use P2P to send money out of the country to a family member, friend, or associate;
… 25 percent are likely to use P2P to split the cost of a gift with co-workers, friends, or family members.
The second concept tested in the research was an ePayment Portal, defined as a service provided by a financial institution allowing consumers to transfer money, pay bills, conduct P2P payments, and track all their money movement from a single place online. Nearly half of consumers (49 percent) expressed interest in the Portal concept. Of this interested population, 70 percent would likely use P2P payment services within the Portal.
Paul McAdam, a Partner at eCom Advisors stated, “We are very encouraged by the results of this research. Nearly half of today’s online banking consumers expressed interest in using a P2P payment service offered by a financial institution, and if the P2P service is integrated with a suite of money movement solutions within the online bill-payment application, consumer interest jumps significantly. This research provides significant evidence of a large pool of pool of likely P2P adopters.”
Another key finding is consumers who have already adopted mobile financial services likely will be the first adopters of financial institutions’ P2P payment solutions. Consumers who used their mobile phones to access their bank account or view or pay a bill within the past 30 days reported a likeliness to use the study’s P2P payment concepts at rates more than two times higher than those reported by the overall sample of active online banking consumers.
“Today’s active mobile banking consumes are clearly attracted to the notion of replacing cash and check transactions with P2P payments via their mobile devices,” stated McAdam. “In addition to targeting marketing communications to encourage this segment to adopt P2P, financial institutions should also integrate P2P payments with their mobile banking services.”