Opportunities for P2P with B2B

by Sarah Grotta 0

With the launch of the Zelle standalone person-to-person (P2P) app this week, attention has been focused on consumers’ use of the various market available products.  In FIS sponsored content in the American Banker, and interesting data point is discussed coming from FIS’ annual Performance Against Customer Expectations (PACE) survey suggesting that small businesses are active users of P2P apps:

The FIS 2017 Performance Against Customer Expectations (PACE) Report found that SMBs are adopting digital payments at more than three times the rate of everyday consumers—and they’re using them as a way to quickly pay vendors and most likely take payment.

In fact, according to PACE, 40% of SMBs reported using person-to-person (P2P) payments to pay a vendor or supplier in the past 30 days. Compare that to just 12% of U.S. consumers who reported making P2P payments. Even more interesting is that the usage rate climbs to well over 50% for businesses with more $25 million in annual revenue.

 While there has been a lot of conversation regarding the potential opportunities of business to consumer (B2C) distribution payments including consumer refunds, insurance payout and like transactions, there hasn’t been much coverage of B2B transactions with Zelle, Venmo, Square or other similar applications.  This may represent an opportunity for financial institutions as small businesses may be more willing to pay a small fee for the service and, according to the article, are interested in the security of a bank-based payment service.

Bank-owned solutions, while often in their infancy, may prove to be a formidable response to third-party solutions. Bank-owned solutions build on existing bank payment networks and allow any U.S. account holder at a participating bank to send or receive near-instant payments from other account holders in the network using a phone number or email. It offers a compelling combination of convenience, familiarity, and the security users say they want.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

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