Even before the pandemic, many people had already discovered a faster, easier way to pay a group bill – and to make a wide variety of other Person-to-Person (P2P) payments. Digital P2P platforms make transferring money to friends and family simple, safe and convenient. And with the pandemic reducing our use of cash and creating new situations where people need to transfer money to others remotely – such as paying a piano teacher for an online lesson, reimbursing a friend who collected groceries for you when you were self-isolating, or contributing to social causes – we expect this trend to continue long after the virus is gone.
Digital P2P payments are enabling commerce during the pandemic. In fact, demand is at an all-time high for many of the major P2P players as people look to digital platforms to continue living their lives while social distancing. For example, Zelle has experienced a double digit increase in enrolments. Both PayPal and Venmo are experiencing a “tremendous surge” in demand. In India, citizens have increased their usage of digital payment options by 42 percent. And in China, where digital payments were already dominant, the pandemic could be a continued driver for the move away from cash. Indeed, SARS was a key driver in launching digital payments in the country in 2003, enabling homebound people to shop online.
The lockdown has given P2P providers a boost – driving people to digital platforms, particularly individuals who have been previously reticent to experiment with digital financial services. Secular trends – such as the growing ubiquity of connected devices, evolving consumer expectations for convenience and immediacy, and improved security of digital financial services – were significant tailwinds for digital financial services even before the pandemic. Today, consumers are increasingly moving away from cash and opting for contact-free and digital payments experiences. And evidence indicates that these changes are here to stay.
Smart phone ownership continues to rise and, as internet access improves globally, we are seeing an entire generation of digitally-savvy consumers growing up with digital P2P services at their fingertips. Forty-five percent of the world, 3.5 billion people, own a smartphone. Smartphone users are accustomed to the using their devices to manage conveniently every aspect of their financial lives. Consequently, we have to ask: if sending money is as easy as sending a message, if all you need to know to send money to someone is their phone number or email ID, why would anyone go back to cash?
Additionally, because the security of digital P2P has improved significantly, consumers no longer face a trade-off between security and convenience.
Digital P2P solutions provide clear benefits to consumers, but they also present considerable opportunity for the financial sector. The accelerated pace of digital payment innovation, combined with the impact of the coronavirus pandemic, could make 2020 the year that we see a step-change, rather than incremental change, in the way P2P platforms enable people to pay and get paid.
At Mastercard, we’re supporting these changes by collaborating with our partners to develop innovative P2P solutions. For example, leveraging Mastercard Send, the launch of Moneytou, enables Viber users to send money as easily as sending a message. We’re also working with PayPal on its Instant Transfer service in a number of markets including Singapore, Europe and the US to allow customers to transfer funds from their PayPal wallets to their Mastercard cards in real-time.
The pandemic is accelerating digitisation globally by making digital financial services like P2P even more relevant in people’s day-to-day lives. With consumer demand for digital P2P platforms only increasing, now is the ideal time for incumbents in the financial sector, and new entrants, to take full advantage of this opportunity.