Tuesday , March 19, 2019

Many Consumers Shun P2P Payments To Avoid Fees, Though Few Services Charge Them

The impending demise of Snap Inc.’s Snapcash service comes at a time when peer-to-peer payment services are growing rapidly, but many consumers still remain hesitant to use them. Some of these consumers are confused about pricing, new findings from Fiserv Inc. suggest.

Fiserv, a Brookfield, Wis.-based financial-institution processor, on Monday released results of a survey of 3,114 U.S. adults conducted for it by The Harris Poll. Researchers found a majority of consumers use a P2P payments service of some kind, and 17% of the respondents said they had used a such service from a financial organization within 30 days before they were surveyed last November and December. Some 44% of that group said their usage had increased over the preceding year.

The top four of eight reasons presented for using a financial institution’s mobile or online P2P service were “saves time and hassle,” cited by 54% of users; “it’s convenient,” 50%; “I have more control,” 36%, and “it’s safer,” 26%.

But many consumers still haven’t tried a P2P service from a bank, credit union, or other financial institution. Asked to select their top three reasons why not, 44% of the non-users cited a preference for other payment methods; 38% said there were unwilling to pay a fee and 24% said they were concerned about online security. Additionally, 23% said they didn’t know how P2P works, and 15% said they didn’t know their financial organization offered such a service.

The fee issue is particularly interesting in light of P2P pricing trends, which usually spare consumers from paying fees. Processors such as Fiserv, which offers the Popmoney service to financial institutions, and Fidelity National Information Services Inc. (FIS) with its People Pay service, charge banks and credit unions for using those P2P systems, but it’s up to their clients to set retail pricing, if any. The same goes for Zelle, the bank-owned P2P service from Early Warning Services LLC.

“Insights from the latest Fiserv consumer research found 38% of non-users of person-to-person payments cite an unwillingness to pay a fee, yet few of the major P2P systems charge a fee, so the findings underscore an opportunity for more consumer education by organizations,” Devin McGranahan, senior group president at Fiserv, tells Digital Transactions Newsby email.

Banks and credit unions often say that even though P2P services generate little if any consumer revenue, they compensate for at least part of their expense through enhanced customer relationships and reduced attrition. But some P2P providers, particularly non-bank ones such as PayPal Holdings Inc.’s Venmo, have adapted their services for payments to merchants, who have proven more willing than consumers to pay fees.

In related Fiserv/Harris findings, among those who had used a P2P service in the preceding year, 45% said an email address was their preferred way to identify a P2P payment recipient. Respondents could state multiple preferences. Some 43% cited the recipient’s account information; 35% preferred a phone number, and 18% cited the recipient’s photo. Twenty-three percent expressed no preference.

The survey also covered mobile banking, bill payments, and related topics. All the respondents came from households that had a checking account with a bank, credit union, brokerage firm or other financial organization, and had used the account to pay a bill or make a purchase in the preceding 30 days. Fiserv said the data were weighted to ensure that relevant demographic characteristics of the sample match the U.S. general population.

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