Digital Payments Seek Life Beyond Sending Money To Friends

When most people think of digital payments, their minds still jump to use cases like splitting the dinner check, paying the babysitter or sending their college students a few extra dollars. Peer-to-peer (P2P) payments still work in all of those contexts, and quite well — but as of 2021, consumers are now using digital payments for new use cases, as Sean Loosli, head of consumer and small business payments for Zelle®, Early Warning Services, told PYMNTS,

Accelerated by the pandemic, many consumers and businesses became digital commerce converts nearly overnight, seeking new and better ways to pay and get paid that better align with the emerging needs of the digital economy. That shift pushed a lot of those consumers to expand how they leverage P2P payments. According to Zelle consumer research, nearly one-fifth of consumers are using P2P payments more often now than they were before the pandemic. They are using digital payments for things like charitable giving, paying small businesses and service providers, and even paying their rent every month.

The progress is encouraging: Loosli noted that Zelle alone reaches around 40 percent of all U.S. small and medium-sized businesses — but it’s still only the start. The bigger goal is to reach true ubiquity — enabling digital payments to be used anywhere and by anyone.

Giving Consumers What They Want

While often associated with younger consumers, P2P has expanded its use range as a result of the pandemic. According to Zelle consumer research, about half of all older consumers report having increased their digital payments usage and 80 percent of those consumers further report that it was an easy experience. As Loosli told PYMNTS, that data signals one thing when it comes to P2P: time’s up.

In the not-so-distant future, he noted, P2P won’t be considered an advanced offering for a financial institution (FI) to provide to their customer base — it will be “table stakes” to play in the digitized economy.

“As the payments ecosystem grows, digital and touchless payments will be used for a lot more than just person-to-person transactions,” Loosli predicted. “We’re seeing the largest financial institutions as well as regional banks and credit unions already integrating them.”

The Changing Field

The economy is seeing an increase in digital payments across all use cases, as new tools are emerging to make payments flow faster, easier and safer than ever before. And in a way, said Loosli, new opportunities are emerging for all players in digital marketplaces — from consumers to business owners to gig workers.

The opportunity is there for the taking — consumers are making that clear both in what they are saying and in what they are doing. But this race will go to the swift, rewarding those who see the opportunity rising and move quickly to be part of the increasingly ubiquitous P2P payments flow, instead of finding themselves locked outside of it.

“Having digital payments integrated into your banking app can be a very powerful tool for attracting, engaging and retaining consumers and small businesses for financial institutions of all sizes,” said Loosli.