You have probably heard the sad stories of consumers using a P2P app, sending money to the wrong person by entering the wrong mobile number then having to beg the stranger who received their money unintentionally to do the right thing and give it back. The Chicago Tribune relayed one story like that:
When Michael O’Neil tried to pay the company that inspected the Lincoln Park condo he bought last summer, he had no idea there was a company on the East Coast with a nearly identical name and an email address that differed by just four letters — until he sent $360 to the wrong business.
It was my mistake, but one that I thought was immediately protected,” he said. “Four letters shouldn’t cost you ($360).”
The problem is that consumers assume that a P2P transaction is more like a merchant transaction and not a cash transaction. But P2P providers like Venmo and Zelle are rolling out new features to help:
Last year, Venmo gave users the ability to add profile pictures to their accounts, introduced automatic flags that pop up if the sender doesn’t know the recipient, and added other measures to try to slow down users before they hit send. Early Warning Services, the bank-owned consortium behind Zelle, expects its partner banks to roll out pop-ups or alerts by the end of the month that ask users to confirm they’re sending money to the right person.
Although users often are sending each other $5 or $10 for pizza or beer, those transactions add up. Zelle processed $32 billion in payments between July and September, up 67 percent from the same period last year, according to Early Warning, which is based in Arizona but has an office with about 40 employees in Chicago. More than 75 million email address and phone numbers are enrolled in Zelle, which has its own app and can be offered through banks’ apps or systems. Zelle also processes corporate disbursements, such as insurance payouts, which are included in its numbers.
Overview by Sarah Grotta, Director, Debit and Alternative Products at Mercator Advisory Group
