P2P Payment Market

Peer-to-peer (P2P) payment is an electronic money transfer method that allows individuals to transfer funds from their bank account or credit card to another individual's account via a mobile device or computer. The P2P payment market has been growing rapidly in recent years due to its convenience, speed, and security.

Current Market Size and Market Share-

global P2P payment market is expected to grow at a CAGR of +26% during forecast period, reaching ~USD 9 trillion by 2028

The market is primarily driven by the increasing adoption of digital payments, growing internet and smartphone penetration, and rising demand for quick and easy payment methods.

North America holds the largest market share in the P2P payment market, followed by Europe and Asia-Pacific. The growth of the P2P payment market in North America is primarily attributed to the increasing adoption of mobile payment solutions, rising demand for contactless payments, and a growing number of smartphone users.

Key Players-

• Alibaba.com 
• Apple Inc. 
• Circle International Financial Limited 
• Google LLC 
• One97 Communications Limited (Paytm) 
• PayPal Holdings Inc. 
• Square, Inc. 
• WePay Inc.
• Wise Payments Limited 
• Zelle

Segmentation-

By Transaction Mode

• Mobile Web Payments
• Near Field Communication
• SMS/Direct Carrier Billing
• Others    

By Payment Type

• Remote
• Proximity

By End User

• Personal
• 18 to 30 Year
• 31 to 54 Year
• 55 to 73 Year
• Business

By Application

• Media & Entertainment
• Energy & Utilities
• Healthcare
• Retail
• Hospitality & Transportation
• Others

Major Trends and Drivers-

The P2P payment market is being driven by several key trends, including the increasing adoption of mobile payment solutions, rising demand for contactless payments, and the growing popularity of e-commerce. The COVID-19 pandemic has also accelerated the adoption of digital payments, as consumers increasingly opt for contactless payment options to minimize the risk of infection.

Another major driver of the P2P payment market is the increasing demand for quick and easy payment methods. P2P payments allow consumers to transfer money instantly, without the need for cash or checks, making them an attractive option for both individuals and businesses.

Opportunities and Threats-

The P2P payment market presents several opportunities for businesses, including the ability to offer fast and convenient payment options, attract new customers, and reduce the costs associated with traditional payment methods. However, the market also faces several threats, including security concerns, regulatory and legal issues, and intense competition from established players and new entrants.

Regulatory and Legal Issues-

The P2P payment market is subject to several regulatory and legal issues, including consumer protection laws, anti-money laundering regulations, and data privacy laws. In the United States, for example, the Consumer Financial Protection Bureau has issued regulations governing P2P payment providers, while the European Union has implemented the Payment Services Directive (PSD2) to regulate electronic payment services.

Target Demographics and Preferences-

The target demographic for P2P payments includes millennials and Generation Z, who are tech-savvy and prefer digital payment options. These consumers value convenience, speed, and security, and are likely to opt for P2P payments over traditional payment methods.

Pricing Models-

There are several pricing models used by P2P payment providers, including:

Free P2P Transfers - Some providers offer free P2P transfers to attract new customers and encourage them to use their platform. However, there may be fees for other services, such as instant transfers or international transfers.

Flat Fees - Some providers charge a flat fee per transaction, regardless of the amount transferred. This pricing model is common for international transfers, where the provider incurs additional costs for currency conversion and cross-border fees.

Percentage Fees - Some providers charge a percentage of the transaction amount as a fee. This pricing model is common for instant transfers, where the provider incurs additional costs for processing the transaction quickly.

Pricing Trends-

The pricing trends in the P2P payment market vary across different segments. Here are some of the key trends:

Free P2P Transfers - Free P2P transfers have become a standard offering for many providers, especially in the United States. Providers such as PayPal, Venmo, and Cash App offer free P2P transfers, but may charge fees for other services, such as instant transfers or international transfers.

Flat Fees - Flat fees are commonly used for international transfers, where the provider incurs additional costs for currency conversion and cross-border fees. Providers such as TransferWise and WorldRemit offer competitive flat fees for international transfers, which are often lower than traditional banks.

Percentage Fees - Percentage fees are common for instant transfers, where the provider incurs additional costs for processing the transaction quickly. Providers such as Zelle and Popmoney charge a percentage of the transaction amount for instant transfers, which can be up to 3% for some transactions.

Segmented Pricing

Pricing in the P2P payment market can also be segmented based on factors such as transaction size, transaction speed, and the type of payment method used. Here are some examples of segmented pricing in the P2P payment market:

Transaction Size - Some providers offer different pricing tiers based on the transaction size. For example, PayPal charges a fee of 2.9% + $0.30 per transaction for payments made using a credit or debit card, but reduces the fee to 2.2% + $0.30 for transactions over $1000.

Transaction Speed - Some providers charge higher fees for instant transfers, which are processed within seconds. For example, Zelle charges a fee of 1% for instant transfers, but offers free standard transfers that take up to three business days to process.

Payment Method - Some providers charge higher fees for payments made using a credit or debit card, which incur higher processing costs. For example, Venmo charges a fee of 3% for payments made using a credit card, but offers free payments using a linked bank account or debit card.

Conclusion-

Pricing is an important factor in the P2P payment market, as providers compete to attract customers with competitive fees and pricing models. The pricing trends in the market vary across different segments, with providers offering free P2P transfers, flat fees for international transfers, and percentage fees for instant transfers. Segmented pricing based on factors such as transaction size, transaction speed, and payment method can also impact pricing in the P2P payment market. As the market continues to grow, pricing will remain a key consideration for both providers and consumers.