Apple Enters P2P Payment Space: What They Should Keep in Mind

by on Nov 12, 2015

Apple is reportedly in discussions with U.S. banks to develop a mobile person-to-person payment service to compete with Venmo. Corporate Insight’s Bank Monitor service recently reviewed the P2P payments platforms offered by leading banks, comparing them to popular third-party services like Venmo and Google Wallet. We found that Venmo outperformed the services offered by banks in areas like fees and delivery speeds. Venmo is not without its flaws, however, as banks tend to offer more customization in the timing and frequency of payments.

Any new P2P service should keep the following goals in mind:

  • Allow users to send money with no fees – One of the chief appeals for Venmo users is the ability to send money to friends with no fees. This is still a challenge for some banks, Bank of America and U.S. Bank, that charge as much as $3 for a three-day transfer. Venmo moves money instantly with no charge.
  • Develop a new network allowing users to make instant payments – The Wall Street Journal reported that Apple’s P2P platform might tap into the clearXchange network, which expedites transfers for participating banks. Whether the service uses clearXchange or a newly developed network, users should be able to send money instantly to contacts, a benefit that would help traditional banks gain ground on the independents.
  • Include the ability to request money from contacts – Venmo users can “charge” their friends and relatives. A few banks offer this ability through proprietary services or the commonly used Popmoney platform, but it is not yet a universal feature. Apple’s platform will need to allow users to ping their contacts for funds.
  • Give users flexibility in scheduling payments – One of the features missing from PayPal, Google Wallet and Venmo is the ability for users to schedule recurring and future-dated payments. Consumers familiar with online banking services are used to scheduling transfers and bill payments, and will expect the same with P2P payments.
  • Consider a social tie-in – To appeal to millennials, Venmo incorporates a social media feed into its service, although not all users will be comfortable with friends checking in on their financial transactions. With that said, Venmo users are able to tap their Facebook friends to send and request money, a feature all P2P platforms should offer. As of now, bank services can only send money to contacts via their email address or mobile numbers.

It is promising to see Apple working with banks to bring a new P2P platform to the market. While Venmo currently enjoys wide popularity, there is plenty of room for strong competition in the P2P space. Both Apple and leading banks can benefit from a partnership, combining the design and usability expertise of Apple with bank customers who wish to transfer money directly from their bank accounts without using an intermediary like Venmo.