For those who grew up in the digital world, person-to-person or peer-to-peer (P2P) payment applications are nothing to write home about. Gen Z and Gen Alpha have always known the glories of paying a friend for coffee via their phone. For the older generations, however, P2P payments are an incredible advancement in financial technology.
With so many choices for person-to-person payment platforms, one might wonder how we got here. Who created the first P2P payment platform? Why was it developed? How do we expect it to advance in the future? Most importantly, how will it impact the credit union industry?
History of the Direct Payment Apps
The first iteration of P2P started with Max Levchin and Peter Theil who founded the company Confinity, Inc. After merging with X.com, owned by Elon Musk, they launched the first public offering of PayPal as a money-transferring service in October 2000. To this day, PayPal is still a leader in digital wallet spaces all over the world.
PayPal paved the way for many future P2P platforms including Zelle, Venmo (owned by PayPal), CashApp, and Apple Pay. All of these companies expanded on the foundation of PayPal — providing secure money transfers from person to person, or person to the merchant.
It is almost impossible to escape P2P payment platforms nowadays. Even if you don’t use one personally, it is almost guaranteed you know at least one person who does. In 2018, it was estimated Zelle had nearly 27.4 million U.S. users and Venmo had 22.9 million. The current trends show that P2P payments are not slowing down anytime soon.
What Does This Mean for Credit Unions?
Credit Union Times reported about Fiserv, “The Brookfield, Wis.-based payments and fintech firm announced this week that it connected more than 360 credit unions and other financial institutions to Zelle via Fiserv’s Turnkey Service in 2019, bringing the total to almost 600. In addition, the number of people using Zelle via Fiserv to send money jumped 116% in 2019, and the number of people using it to receive money rose 145%. Transactions were up 207% in 2019, it added.”
For P2P payments to be accessible for all consumers, it is important for financial institutions to pursue partnerships with P2P payment platforms. Credit unions are no exception. Many credit unions see the demand for P2P payment platforms by their members and are establishing partnerships with fintech companies just like Fiserv to provide that service.
Maybe now is the time for your credit union to pursue a partnership that will benefit your members with P2P payment options.
Oak Tree is the perfect partner for credit unions. We supply compliant forms and documents for membership, consumer lending, and home equity lending. Contact us today for a free forms analysis, and to learn how we can help streamline your credit union lending.