The peer-to-peer payments market is growing as consumer demand ticks up and new competitors enter the space.
P2P payment market size is expected to reach $6.4 billion by 2028, according to a January report by market research group The Business Research Co.
In fact, 81% of banked U.S. consumers have P2P accounts, according to a report from market researcher Datos Insights released in September 2023. Datos surveyed 5,895 consumers in the United States to understand their attitudes and acceptance levels for P2P payments.
P2P market leader PayPal captures 75% of P2P payments, according to Datos. Other P2P competitors include:
This year, a new competitor will join the list: X, formerly known as Twitter, is entering P2P payments, according to an X Business blog post earlier this month.
“We will launch peer-to-peer payments, unlocking more user utility and new opportunities for commerce, and showcasing the power of living more of your life in one place,” the post stated.
Aaron McPherson, principal at Newton, Mass.-based AFM Consulting Partners, told Bank Automation News he questions whether X will be a significant competitor.
P2P payments is “a crowded space right now,” McPherson said, suggesting that maybe it would have been better for X to partner with an existing provider.
“We know [Elon Musk] has ambition to make X more of an everything app” and this is part of that effort, McPherson said.
P2P innovation
While X breaks into P2P payments, PayPal is already innovating in the space, PayPal President and Chief Executive Alex Chriss said Jan. 25 during the payments provider’s First Look keynote presentation.
Chriss named the following new products PayPal plans to launch this year:
- Checkout, which accelerates the checkout process to improve latency and streamline purchases;
- Fastlane, a one-click guest checkout option that saves customer information without the need for a username and password; and
- Smart receipts, a digital receipt that allows consumers to track purchases and uses AI to predict what a consumer might want to buy next.
PayPal will also launch an app in March called CashPass, which uses AI to organize personalized offers for customers based on their shopping behaviors, according to a PayPal release.
Expanding reach
With innovation and competition in mind, P2P payments provider Visa is also focusing on expansion, Chief Executive Ryan McInerney said during the card giant’s fiscal first-quarter earnings call Jan. 25.
Visa expanded its Visa Direct relationship with Meta during its Q1, McInerney said on the call.
“Excluding Russia and China, we see $200 trillion of opportunity annually across B2B, B2C, P2P and G2C [government to consumer] — certainly an enormous number,” McInerney said. “We are working with our clients to deliver Visa’s commercial and money-movement solutions to help digitize these flows on our network of networks.”
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