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P2P Payments: Defining the Potential
Datamonitor, December 2012
The global P2P market is currently undergoing a phase of rapid and unprecedented development driven by both changes in global consumer dynamics and the impacts of emerging, and potentially transformative technologies. As the market continues to grow, payment providers are now faced with the opportunity to replace more traditional forms such as cash and cheques, but will face new challenges.
- Understand the market's potential with Datamonitor's definitions and analysis of key P2P market segments.
- Plan your international strategy effectively by seeing how key P2P systems work, and where there are gaps in the market
- Develop new products by seeing what impact technology is having on the market and what this means for payment providers.
- P2P payments are among the most basic forms of transaction but the mechanisms used have many implications for payment providers. All transactions fall within the broad range of proximity and remote, and domestic and remittance P2P payments, and new technologies are having an impact on all of these mechanisms.
- Many established payment tools including cash and money agents continue to hold key advantages and will remain in high use. However the growth of new tools such as digital wallets, means that consumers are finally beginning to shift towards newer platforms. This marks a key opportunity to replace cash and other older payment tools.
- The regulatory environment means that developing a truly universal cross border P2P platform remains an unlikely development in the near term. Despite the growth in remittances, the trend is more likely to be for more regulatory hurdles not less.
Reasons to Purchase
- What are P2P payments? What drives consumers to use these payment tools?
- How are P2P payments evolving? What do the latest technologies and services mean for the market?
- What's the use case for P2P payments? Why should my company enter this market?
- How can payment providers profit from P2P? What are existing players doing now?
P2P PAYMENTS: DEFINING THE POTENTIAL
- Defining person to person payments
- P2P transactions fall into several overlapping categories
- Digital technologies are blurring the boundaries and renewing interest in the P2P space
- Proximity P2P is dominated by basic and established payment tools presenting an opportunity for new modes of P2P
- Cash is universal and untraceable, but holds hidden costs and is the big P2P opportunity
- Cheques are in decline but are unlikely to disappear outright
- Remote P2P payments all face similar challenges
- Traditional remote P2P methods remain common in many markets
- Money agents are the most global providers of P2P services
- Card scheme P2P services are growing their capabilities in domestic and remittance transactions
- Bank transfers are growing in use among consumers in many markets but are increasingly a hygiene factor for providers
- Mobile banking is driving sustained growth in P2P bank transfers
- Digital wallets are emerging as a new focal point for P2P payments
- The key mechanisms of digital wallets are similar regardless of the provider
- Most digital wallets struggle with book transfer systems of moving funds
- Moving money in and out of the wallet poses challenges for providers
- Float value is not enough of a revenue generator for most digital wallets
- Regulation differs dramatically, making a universal model difficult to implement
- PayPal has struggled with differing regulatory regimes in several of its international markets
- Credit card
- Debit card
- European Payments Council
- Merchant service charge
- Mobile network operator
- Mobile payments
- Person to person payments
- Point of sale terminal
- Prepaid card/stored value card
- Trusted service manager
- Further reading
- Ask the analyst
- Figure: Chase now offers digital cheque deposits across a range of devices
- Figure: Hawala P2P transactions do not send money across distances
- Figure: Visa Money Transfer has launched in a range of countries including Ukraine
- Figure: Mobile banking is expanding the use of bank transfer P2P services
- Figure: P2P is a key element of the development plan for mobile banking services globally
- Figure: Many digital wallets operate via a book transfer of funds