The P2P Payment Wars

NEW YORK (MainStreet) —The fight is real, and it involves some of the biggest bruisers in financial services. The question however is blunt: do any of the rest of us honestly care at all about peer-to-peer payment tools that would let us, with a few clicks, send a tenner to any email address or maybe any Twitter handle, possibly any cellphone number?

The tools to do all that exist and they work fine -- but the truth also is that the vast majority of financial institutions have no p2p offering. What's more, most of us have never used them.

“Only 12 of the top 100 banks have p2p,” said Paul Grill at the consulting firm First Annapolis, which has studied p2p adoption in depth. That number dates back to research conducted four months ago, and the number may have nudged up a click or two. Either way, p2p usage is anemic.

The oddity is how terrifically p2p works, for those who take the plunge. It’s fast, convenient, often free. Need to pay a babysitter $20? Send a $25 birthday gift to a nephew on the other coast? $500 to a roommate as a share of the rent? P2P is ideal for any of those use cases.

The alternative in those for instances is to pay in cash or check and, understand, these are not cases where online bill payment could easily be brought into service. Attempt to pay a person, rather than an established business, using the bill pay that is part of online banking and almost all institutions will print out a check and pop it into U.S. Mail to the recipient, meaning a delay of many days, possibly a week or more. It also necessitates knowing the recipient’s mailing address.

Thus the argument for p2p, which promises transfers within a couple days (real time transfers are in tests and probably will be rolled out broadly within a few years) for transfers within an institution. Transfers to other institutions can take longer, as kinks in cross-institution transfers are still being ironed out.