The past few years have seen substantial growth in the peer to peer (P2P) payments market, with payment apps replacing cash and checks. Friends and family members who want to split the cost of a ride share, dinner, rent, or utilities are enjoying the convenience and speed of these mobile apps.

To discuss the growth of P2P payments and real-time payments strategy for financial institutions, PaymentsJournal sat down with Derek Swords, Vice President, Product Management at  Fiserv and Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group.

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Recent Growth in the P2P Marketplace

“There’s been some really pretty amazing growth in the P2P space, something that I don’t think we’ve seen [since] the beginnings of debit cards,” reports Grotta. The graph below reflects the rapid growth of Venmo and Zelle, the largest two P2P apps, over the past three to five years.“This tells me that P2P is really solving payment issues for its users, and it’s offering an incrementally better option over alternative forms of payment,” observed Grotta.

Zelle transaction and integrated partner growth

Accompanying this growth in P2P payments has been considerable growth in the number of financial institutions that are integrated with Zelle or have announced planned partnerships.  While recent years have seen dramatic growth, transaction growth is expected to continue at a slower pace as most of the largest financial institutions are already on board and new integrations are in the mid and smaller sized financial institutions.

Recent bank branch closures and pandemic related concerns over the use of cash have accelerated the growth in P2P payments. “First time users and new app downloads have really increased in the last couple of months,” noted Grotta. The expectation is that once these new users become comfortable with the technology, many will continue to use P2P payments permanently.

Driving Forces Behind Mobile P2P Payment Adoption

As Swords outlined, a number of factors have contributed to the wide scale adoption of P2P payments over the past several years.

* Growth in mobile: Consumers are becoming increasingly comfortable making mobile payments.* Speed: The majority of consumers want and expect to send and receive money in real time.* Cross generational appeal: P2P use is expanding beyond the younger, more tech savvy early adopters across every generation from teens to seniors.* Marketing: National marketing by P2P networks,