P2P Payments Report: the exploding market for smartphone apps that transfer money

05 May P2P Payments Report: the exploding market for smartphone apps that transfer money

In a recent report from BI Intelligence, 10 of the most exciting Peer-to-Peer payment apps are profiled. In the report it is explained how these apps may serve as a bridge to wider use of smartphones to complete in-person “walletless transactions,” at stores and restaurants. Present use cases include money transfers between friends and family, international remittances, and even fees and wages paid to independent workers.

A new generation of apps make transferring money faster, less expensive, and more precise. They also reduce the hassle of going to a money transfer agency, remembering a checkbook, or finding an ATM. The opportunity is huge. Globally, the market for peer-to-peer transfers and remittances is worth well over $1 trillion. Read more about it: uk.businessinsider.com (blogpost by John Heggestuen)

Here are some of the key takeaways from the report:

• Large tech companies and startups are getting involved in P2P (threatening legacy financial institutions). Google Wallet is already a player in this space, and Facebook seems to be moving closer to offering a service. The P2P market is larger than many people imagine.
• Globally, the volume of P2P payments is over $1 trillion and only a sliver of those transactions — just $5 billion in the U.S., for example — are currently conducted via mobile phones.
• Peer-to-peer payment apps solve real pain points for consumers. Our high-end estimate is that mobile P2P transactions volume could reach $86 billion in the U.S. by 2018.
• In emerging markets, there is especially huge potential for P2P payments made on cell phones, due to a lack of financial infrastructure. A high proportion of the population in these markets lack access to checking and savings accounts.
• Kenyan telecom Safaricom provides an excellent case study for the success of mobile P2P payments in emerging technology markets. The telecom has a product called M-Pesa, which allows its users to transfer money to one another via text message. Largely as a result of M-Pesa’s success, an impressive 92% of Kenyans say they have used mobile P2P payments.
• Mobile P2P payment services are usually free or next to free to use, which begs the question of how they will be monetized. Different services have experimented with fees and even advertising. But mainly, these services will serve as Trojan horses to gain user trust for mobile-based transactions in general.

You can get access the full report by signing up at BI Intelligence