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Pay attention to P2P: payments are transforming on mobile

Amelia Baer
  • Amelia Baer
  • December 1, 2014
Pay attention to P2P: payments are transforming on mobile

The way we exchange money has changed radically in the last few years. Carrying cash is a rare practice today—visiting the ATM is a hassle for people with vigorous schedules, and often it’s only for a small amount to cover a portion of the check at a restaurant. The one item most people rarely leave behind is their smartphone, and with the growth of mobile ecommerce, users are becoming more comfortable using their phone to make payments. Mobile payment platforms allow everyday people to send and receive money without ever touching a dollar bill. In 2010, Square gave us the ability to accept credit card payments. Shortly thereafter, the physical card was no longer necessary. Person-to-person payment applications and the maturing mobile wallet market are leaving a lasting impact on today’s transactional behaviors.

With the variety of P2P payment apps available, there has yet to emerge a standardized and optimally widespread experience for users. Individual financial institutions’ personal payment services, like Chase Quickpay, add to the fragmentation of systems used to repay people. Communities of friends have yet to declare the go-to payments app, leaving usage fragmented and creating a huge opportunity for development in this niche area. Although peer-to-peer payment applications are still combating shortcomings, apps like PayPal, Venmo, Square Cash, and Snapcash are leading the charge to making paying back friends easy, safe, and interactive.

PayPal-Mobile-payments

PayPal was a pioneer into internet payments and helped people become comfortable with banking outside the traditional brick-and-mortar institution. It quelled concerns about online security and familiarized person-to-person payments beyond cash or check with an online platform to send, receive, and hold payments. PayPal users have typically associated the product with its web interface, but with over a decade under its belt, PayPal has maintained a name users trust and has expanded mobile offerings to reach users wherever they exchange money.

“Venmo me,” is a phrase heard often when one person picks up the tab for others. What they’re referencing is the exceptionally popular app Venmo, which allows anyone with a smartphone to quickly send money to anyone else with the application. While that may not sound especially novel, the app integrates characteristics of popular social platforms to add an extra element to sending money. Users can invite friends or search people in contacts to create a friends list within the app—these people in turn can accept and send payments safely and instantly, regardless of bank. These features have helped Venmo achieve a widespread adoption rare among payment apps, and perhaps helped the app lead the charge into a post-cash future for ordinary people.

Venmo-iphone-mobile-payments

Venmo allows friends to include a status-like note with each payment, which populate a News Feed–like stream where friends can comment and like the updates. The amount of money sent between two people is always private, only the message can be seen by other users. There is always the option to turn a profile completely private—much like Facebook’s “public” versus “friends only” or “only me” options. Recently, Venmo has begun pulling ahead in the P2P payment arena by incorporating a fun and social element to the sometimes awkward world of splitting bills and IOUs.

Square has established itself as an incredibly secure system for both merchants and individuals with its offerings of software and hardware products. Square Cash, the company’s mobile peer-to-peer payments app, has found success with its extreme ease of use and beautiful, minimalist design. For friends to send over what they owe for concert tickets, all anyone needs is an email or phone number to request money via text or email.

“Square Cash is an incredibly easy way to send money to anyone because you don’t even need to register as a user. You just send them an email with the dollar amount in the subject line and copy [email protected]. That’s it. Square figures out the details later,” says Connor Mason, Punchkick strategist and Square Cash user.

Square also powers a recent addition to the world of person-to-person payments, Snapcash. The hit effervescent messaging app, Snapchat, decided to expand its offerings to include payments. Using Square Cash’s simple system of a user ID and debit card, people can send money with a few taps of the finger. Sending payments with Snapcash automatically creates a Square account for the Snapchat user, doing away with cumbersome sign-up screens and email verifications. Snapchat has a young and willing audience, so Snapcash will be an interesting venture to watch and see how many users work the feature into their daily routine.

Snapcash-iPhone-mobile-payments

Person-to-person payment services are fulfilling a definite need in the mobile industry, and today’s apps mark the beginning of an even bigger opportunity to decide the direction of mobile payments. As more users turn to their smartphones, rather than the ATM, for settling dues, bigger players may move into the space to determine how these transactions look and feel in the future. Someday, thanks to the ability to “Venmo” or “Snapchat” funds to your friends, the old “I don’t carry cash” excuse might just go extinct.

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