Bank Board Letter — October 2014
Tom Roberts

As their financial lives have become more digital, consumers have embraced technology like online bill pay and mobile check deposit. But when it comes to paying other people, research shows that most still rely on cash and checks. A 2013 survey found that of the consumers who exchanged money with another person in the previous 12 months, 56 percent had used cash, 41 percent had used a check, and 31 percent had used an online method such as a bank-based person-to-person payment service or PayPal. The single most common way to exchange funds was giving someone cash in person, which accounted for one-third of all person-to-person payments.

While digital person-to-person payments have gained traction in the last few years, particularly among millennials, P2P services have yet to become mainstream. However, there are several catalysts that can boost adoption and use of P2P payments: more education about P2P payments and how they work, improved interconnectivity among existing P2P services, and faster payment options.

Many consumers have only a passing knowledge of P2P services. Although they may be aware that they exist, they may not know that their bank or credit union may offer this capability. There is also a low degree of awareness around how these services work. Thinking that bank account information is required to make a payment, or that only certain people can receive payments, are common misperceptions that can be tackled with customer education efforts. Educating financial institution employees to be knowledgeable about these services, and marketing the services’ availability and benefits, are foundational ways to raise awareness and usage.

Addressing consumer concerns about security is also important. Proactive communication to consumers about security standards and policies that are in place, as well as ready access to customer care, can reassure customers and give them the confidence to use a P2P service for the first time. Reiterating that only a name and email address or mobile phone number are needed to send money can also alleviate concerns about sharing personal information.

Ubiquity is key to successful P2P. People want to be able to send money to anyone without checking to see if they use a specific P2P service, or bank at a certain financial institution. Many services, including the Fiserv’s Popmoney personal payment service, ensure this ubiquity by offering websites where payment recipients can go to claim money, even if their financial institution does not offer the service.

Another way to grow the reach of P2P services while streamlining the user experience is through improved interconnectivity between strategic P2P providers. An open network approach in which P2P providers connect to each other, not just to their specific targeted group of consumers, would speed consumer adoption, eliminate confusion and increase usage of person-to-person payment services.

Consumers increasingly expect to be able to make next-day, same-day and real-time payments. They want to choose the option that best meets their needs and the requirements of a specific transaction. A “real-time first” mentality, which assumes that real-time is the ultimate standard of delivery, makes sense for digital payments. While this level of speed may not always be necessary, it is important to have faster payment options. Fiserv research indicates that financial institutions should see a 20 percent higher adoption rate if a real-time, competitively priced P2P payment option is offered in addition to three-day and next-day delivery options. Consumers have shown that they are willing to pay a reasonable fee for the added convenience of having a payment transmitted instantly. As payment times speed up and recipients have the same immediate satisfaction as having cash in their hand, digital P2P payments have the opportunity to replace more of today’s cash-based transactions.

While the transition from cash and checks to digital social payments will not happen overnight, adoption is accelerating as the services mature and consumers grow more familiar with the benefits. Financial institutions and P2P service providers have the opportunity to accelerate this process by educating consumers and promoting the benefits of these services, pursuing greater ubiquity and interconnectivity and well as offering faster payment options.

Tom Roberts is senior vice president of marketing and electronic payments for Fiserv. For more information, visit