Who Will Win the P2P Payments War?

With the announcement of Apple’s P2P payments service, and the launch of Zelle — a P2P payment platform created by the likes of Bank of America, Wells Fargo and JPMorgan Chase — P2P payments are a hot topic.

In response to the launch of Zelle, Reuters article proclaimed that the largest U.S. banks were launching a Venmo ‘killer’. Maybe Reuters is just reporting that the banks think that they’re launching a Venmo killer.

All of this has led to speculation over who will win the P2P payments war — Venmo, Zelle, Apple, Facebook, or someone else.

You can compare the features and functionality of the various services to try to figure out who will win or lose, but there are two additional factors that will greatly influence the outcome of this battle: 1) consumer behavior, and 2) use case specialization.

Consumer Behavior

You can try to fight me on this, but I will vehemently argue that people will choose the product, service, or channel that is most convenient to them at the moment they want to do something. What that means is this:

  • If there’s someone I regularly text with (using our iPhones), and we’ve updated our phones to iOS 11, and they don’t care that the money I owe them will go onto an Apple Pay cash card instead of into their bank account (which you better believe I care about), then Apple might be my choice of P2P service.
  • If Facebook is my primary means of communicating with someone I owe money to, and that person is based in the US, and that person has a debit card from a bank, and I don’t care that Facebook has crappy fraud protection, then using Facebook’s P2P service might be my choice of P2P service.
  • If there’s someone I regularly split restaurant checks, or rent and utility bills with, and we’ve been using Venmo, then you will need to explain to me why we should change the way we’ve been doing something that works perfectly well.
  • If I’ve never used any of the existing P2P services, and neither has the person I owe money to, and they really need access to the money immediately, and it isn’t going to cost us anything to execute the transaction, then we might use Zelle.

Getting the gist? Situational considerations are going to dictate which P2P service is used for any particular transaction. Some people may end up using multiple services. Some people may only use one with certain people, while using cash and checks with others.

I’m sorry if this offends your need to proclaim a “category killer” or “Venmo killer.”

Use Case Specialization

Use case specialization is not a real term. But in the world of P2P, there are many use cases beyond the over-used examples of splitting restaurant checks and rent bills.

In fact, use cases like gifting, repaying loans, and making alimony payments far exceed restaurant bill and rent splitting in terms of number of transactions and dollar volume.

For all the attention that Apple, Facebook, Zelle, and Venmo get in the P2p space, they’re generic solutions. They ignore the reality that there are other providers coming to market with solutions that address specific use cases where the P2P payment is just a part of the solution. For example:

  • SupportPay provides the capability for exes to make alimony/child support payments, and track the payments made with those funds to ensure they meet child support requirements.
  • Stakd codifies a loan between two individuals and allows the participants to control the amount, interest rate, payback period, and reimbursement method (i.e, P2P payment).

I’m sure that there are, and will be, other examples, but my point is that the generic solutions offered by the tech and banking behemoths may just scratch the surface of the real P2P activity going on in the real world.

So…who will win the war? Apple, Venmo, Facebook, or the banks? The answer is simple: All of them… and none of them.

Ron ShevlinRon Shevlin is Director of Research at Cornerstone Advisors. Check out more of his ideas and research on Cornerstone's Insight Vault. And don't forget to follow him on Twitter at @rshevlin.

This article was originally published on June 14, 2017. All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.


  1. Jim Marous says:

    That is a GREAT post. I think it takes everything that is being said about P2P and breaks it down exactly how it will happen. For instance, I paid 3 people in the last 2 days using three different apps (Venmo, Square and PayPal). One came with a fee I was willing to pay because it was easier for me, for my purpose, on the device I was using.

    People will retain different apps on their phone and in their computer to solve the need they have the easiest way possible. That said, market share will help since people would like to discuss which P2P option both prefer before a payment is made.

    An example, my Square Cash payment occurred because my son has Square Cash. In his case, he sent me a Venmo payment that required him to tell Venmo what his routing number was. Without checks, and being away from home, he sent me his payment to Venmo and got a Square Cash payment from me.

    BTW, Venmo lost an opportunity for a GenZ customer because they made their process too difficult.

  2. Ron, spot on as always.

    “So…who will win the war? I think the answer is simple: All of them, and none of them.”

    Delete the company names from your statement (as I did) and it holds true in all industries as far as mobile apps are concerned.

    Games…social…music…etc…even P2P

    Think of all the “awesome” apps you discovered and then later abandoned in the last 5 years.

    The mobile-centric consumer is only interested in what is latest and greatest at this very moment. When the app becomes “stale” or when I find I am not using it as much, or when I have another new shiny app that my friends are using, I tap delete and move on.

    The are exceptions.

    If we expect our institutions to survive the melee, our top priority must be making our apps one of those exceptions…

  3. Great post, Ron, and a nice antidote to a recent BankThink piece that compared Apple’s iMessage payments service to Betamax.

    We’re very good in banking at seeing a consumer phenomenon and then thinking, “that is great, we should create our own.” I fear this is what happened with Zelle. Probably occurs in other industries as well, when consumers have already voted with their behavior, their time, and their energy. It’s an uphill battle to market products against that.

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