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Nearly half of consumers have embraced digital payments in some form, but banks must continue to leverage secure and convenient features, such as the Zelle network, to take advantage of this growing trend, according to a new survey by US Bank.
Digital payments have grown to become a preferred payment method by a significant portion of consumers across different demographics.
- Nearly half of consumers prefer using digital apps to make payments. Roughly 47% of consumers stated that they preferred digital means for performing transactions, while cash came in slightly lower, at 45%. This difference will likely become more profound as consumers increasingly move away from using cash. In fact, half of survey respondents reported that they carry cash less than half of the time, and when they do, they often don’t use it — 46% of consumers reported using cash fewer than eight days a month.
- And these habits don’t vary much by demographic segment. Although millennials are embracing the use of digital payments more than any other age group — 49% of millennials prefer digital payments to cash — they aren’t the only ones; 44% of Gen X respondents and 32% of baby boomers prefer digital payments to cash.
The shift toward digital payments will become more pronounced with the introduction of secure and instant payments.
- Peer-to-peer (P2P) payments are poised to explode, but payment providers must first address consumer concerns. Security and fees were considered top barriers to adopting or frequently making P2P payments among survey takers. It will be crucial for payment companies to address these issues, especially considering the size of the market they’re competing for — BI Intelligence estimates that total P2P mobile payments volume will grow nine-fold over the next five years, reaching $336 billion by 2021.
- For banks, the launch of Zelle, the P2P payment tool developed by Early Warning, may be the answer to these concerns. In just the first 30 days following the launch of Zelle within the US Bank mobile app, the number of P2P payments skyrocketed by 300%. The fact that banks are providing Zelle as an offering alleviates some of consumers’ security concerns, while also attracting those who are seeking out an instant and convenient P2P feature — 63% of those who have used a P2P app are more likely to continue using the service if it’s backed by a bank, and 78% of respondents are more likely to use a P2P app when they’re allowed to immediately access funds.
Jaime Toplin, research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on mobile P2P payments that:
- Forecasts the growth of the P2P market, and what portion of that will come from mobile channels, through 2021.
- Explains the factors driving that growth and details why it will come from increased usage, not increased spend per user.
- Evaluates why mobile P2P isn’t profitable for companies and details several cases of attempts to monetize.
- Assesses which of these strategies could be most successful, and what companies need to leverage to succeed in the space.
- Provides context from other markets to explain shifting trends.