P2P Payments Study: Mobile Drives Renewed Interest And Growth

June 2012

LINTHICUM, MARYLAND – First Annapolis Consulting announces the release of its 2012 Person-to-Person (P2P) Payments Study.  Building on the 2011 study, this report provides insights on industry trends, service providers, and business models in the P2P market in the United States.  First Annapolis compared the features and functionality of 12 leading service providers, spanning mobile wallets, banking applications, and standalone solutions.  Data pertaining to channel availability, user input and verification requirements, transaction duration, funding and disbursement options, pricing, and advanced features was collected across the registration and transaction processes of the key players.  Additionally, the study provides analysis of the P2P market, including market sizing, use cases, competitive positioning, and social integration trends.

Electronic P2P is approximately an $80 – 120 billion market opportunity.  Rapid growth is being driven more by use cases like ad-hoc bill payment, micro-merchant purchases, and intra-family transfers, than by the “split the dinner bill” transactions historically associated with P2P.  Three distinct business models are emerging that are driven by integration with either banking applications, wallets, or social networks.  These business models leverage the strengths of various providers, such as the networks of Bank of America, Chase, and Wells Fargo (via clearXchange ) with an estimated 70 million online consumer accounts, and PayPal with an estimated 50 million active accounts in the US.  Competitors are also developing functionality to facilitate a more streamlined payment process.  For example, over half of the solutions evaluated now facilitate new user registration entirely from a mobile device, and 75% can leverage the user’s existing contacts list to populate recipient information, a feature that is highly correlated with a faster consumer transaction sequence.  Furthermore, new competitors such as Serve, Venmo, and Dwolla are integrating social network functionality.  Despite these advances, P2P still does not have a compelling, standalone business model, and more than half of the providers surveyed offer the product for free.

During the second quarter of 2012, First Annapolis studied the current state of P2P in the U.S. by testing leading services, tracking recent events, and having discussions with industry participants.  The primary research was developed based on data collected during registration and transaction trials with 12 solutions, and data was verified where possible with the service the providers.  Paul Grill, the Partner who leads the First Annapolis Mobile Commerce & Alternative Payments team is available for interview. For more information, visit the study webpage.

About First Annapolis
First Annapolis is a management consulting and M&A advisory firm focused on the financial services industry with a specific emphasis on payment-related products, services, and delivery.  Clients include U.S. and international financial institutions, payment networks, mobile service providers, retailers, emerging payments providers, and government agencies.  We offer a full range of services including strategy development, market & competitor assessments, financial analysis & business casing, strategic sourcing, plus specialized risk management and other payment industry specific services.  First Annapolis also offers a suite of specialized M&A advisory services that complements our consulting practice.

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