Banking / Finance

Peer-to-peer payment applications. You can make them better!

In this article, I’m going to tell you about P2P payments and most reliable applications, which perform them the best. Fast money exchange between family members and friends via social networks and applications must also be convenient and safe. I can’t disagree that P2P payment is a huge trend, but it needs an improvement to grow. Let’s find out how they really work.

Peer-to-peer applications – what are they?

P2P mobile services are software middlemen. Imagine a guy, who runs to the nearest ATM and back instead of you in a few seconds to let you reimburse your dinner or something.

There are a lot of statistics, which say that the most successful P2P payment apps are PayPal, Venmo, Square Cash, Zelle, Google Wallet, and Facebook app. Second, the less powerful category includes apps like Circle, ClearXchange, and PopMoney. They’re not parts of huge corporations being integratory parts of banks and social networks. Actually, they fight for a lead place under one sun. They all do the same task, with slight differences in taxes and transaction speed. However, that’s only what our eyes can see.

Market tendencies show that separate successful P2P startups may be merged with giants. Let’s take Venmo as an example. In 2012 Braintree bought it. In 2013 Braintree entered into PayPal. Does it mean that there’s no sense in the reinvention of a bicycle? Presumably no. Lower sectors of this realm are still not very crowded, and giants like PayPal won’t compete with newbies. It means that there’s always room for those, who want to take a slice of P2P $100 billions cake.

Development process

Let’s take a look at the common features of all P2P apps to see what they lack.

Each service is totally for non-commercial transactions. They are simply not safe enough for serious payments. Yes, sometimes transactions are instant, but practice shows, that the majority of the last 2-3 business days! It’s getting more surprising, when you find out, that sender can freeze the process and even deny payment. This “awesome” feature makes these apps useful for the circle of dependable friends only. Otherwise, it’s better to push a debtor to the nearest ATM to get the reimbursement. Funny, isn’t it.

There are some other snags, by the way. As you see from the diagram by the 2013 Federal Payments Study, checks are still used by about 20-23 millions of US citizens. There will be no revolution unless P2P payments become absolutely safety-looking means.

There have been no scandals recently, but some apps are less attractive than others. For example, millennials-loved Venmo provides a newsfeed with all your contacts’ transactions, which is too casual for the majority of older users, who are accustomed to having it more privately. That’s why it’s less popular than PayPal which looks more mature with its PayPal.Me protection and all-private transactions.

I also found out, that Square Cash is more competitive than others because it lets you pay those people, who don’t have the app. It’s a great feature, but transactions may last up to one week. That’s not what we want to have in the 21st century. Anyway, there are no such problems for people, who agree to use similar apps to avoid delays and other issues.

It’s a challenging business

To come up with a new P2P app, you should have a huge budget for resource and research expenses. This fact makes developers to use integration, rather than building their own system. PayPal’s Braintree already has its marketplace, where users can make a group transaction via Venmo. Another example is WePay, which sells API integration of the payment system into any web-platform.

I’ve already said that there’s still room for small startups. They have a chance of creating some themed communities, which would allow P2Ps in chats. Specific apps for Asia or Africa are also actual. South-African WeChat version, for instance, doesn’t require its users to provide bank account info. They just need to put money into chat’s wallet.

What’s for tomorrow?

Statista survey says that the USA has more than 78 millions of P2P payment users, which is 15 millions more than last year! Such a tendency will bring a 30 to 40 million growth by 2021, and I have no doubt. It means that this realm will become more competitive. Financial giants would still rule the situation with their cool apps and diverse integrations into chats. The most promising way for smalls is to influence regional markets with some specific apps and microservices.

Bottom line

I hope that now you have enough food for your brain. Weigh your readiness and dive into this young-but-huge sphere of economy. Maybe your product’s zest is going to shoot. Remember to be safe and loyal. Don’t overact with catchy features unless you don’t want to conquer the Japanize market. Just kidding!

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