Rapidly Expanding P2P Market Faces Interoperability Challenges

The rapid rush to digitization pushed by the pandemic period over the last 15 months has sparked something of a renaissance among peer-to-peer (P2P) payments players, not only expanding their offering to consumers but also by looking to take on larger chunks of the markets they serve.

But for all this growth, as Ingo Money CEO Drew Edwards told Karen Webster in an interview last week, there is one remaining hurdle to true P2P ubiquity that still needs to clear, and in many ways is the original hurdle: creating actual interoperability so that consumers have real choice in how they want to send, and receive funds.

Google, for example, announced earlier this spring that it would be taking on cross-border P2P payments in partnership with Western Union and Wise, looking to tap into a global remittance market worth some $700 billion by making it easier for GPay users in the U.S. to send funds to friends and family in places like India or Singapore all from within the app.

Google Director of Product Management Josh Woodward told PYMNTS it was just step one toward the eventual goal of making it possible for users to send funds anyplace from anywhere, as that is the request the firm hears most often from GPay users.

Not just GPay

Google is far from the only player rethinking and expanding their P2P functionality this year. In April, for example, PayPal and Venmo announced they were adding cryptocurrency functionality to their digital wallets so users would be able to use them to buy, sell or hold digital currency.

Zelle, which is run by a consortium of seven banks — Bank of America, BB&T, Capital One, JPMorgan Chase, PNC Bank, US Bank and Wells Fargo — under the Early Warning banner,  reported a 61 percent increase in P2P transactions in its latest earnings report, as well as a 74 percent jump in dollar value.

But the real standout data came from its servicing of small and medium-sized businesses (SMBs), which it called “one of the fastest growth areas for the Zelle Network” and one that saw transactions grow 180 percent over the past year.

What Has To Happen Next 

The growth of P2P has been the result of a series of incredible developments that were virtually unforeseeable a decade-and-a-half ago, Ingo’s Edwards said. But for all that avancement, he noted, P2P networks are still largely closed meaning all parties in a transaction have to download and sign up for a particular app for the transfers to work.

It’s a less onerous step than it was in the day of going through a bank — since it is a lot easier and less expensive to create accounts with a host of P2P apps than it would have been to set up a lot of separate bank accounts — but it’s still a stutter step and bit of friction best removed from the process, Edwards noted.

“One of the biggest points of frustration [with P2P payments] is that everybody wants to receive money in a different way,” Edwards told Webster. “And the burden is on the sender to establish multiple account relationships with Zelle, Venmo, PayPal and Cash App, for example. A sender has to keep track of who wants to be paid which way and then move their own money there so they can send it.”

Edwards said Ingo is innovating by enabling “anyone to everyone” payout capabilities on the Ingo Instant Money network so all the sender has to do is select the recipient — and the network will work out the best way to get the money to them.

But for true ubiquity to be achieved, it is not just about getting large, Edwards said, but providing  true consumer choices within the system when it comes to sending and receiving their money.