Monday, April 18, 2011

Person to Person payments in Mature Economies still needs a tipping point event.

It is unclear how big the person to person payment market is; but indications are that it is huge. Many individuals pay each other for a diversity of reasons and in many locations. These transactions usually occur by means of cash and this is what most of us are used to. Paypal has made some inroads into this sector and online person to person payments via ECH-type payments are big in some countries, but very little progress has been made to turn these payments into mobile in mature economies. Take-up in emerging markets for electronic person to person payments are huge, but this is not the case in first world markets. Why is that?

Many examples can be found where mobile person to person payments are available to individuals in first world markets:

1. Cashedge recently announce Popmoney - a product that enables subscribers to send money from a bank account to some-one else's.
2. Dwollah is a scheme of payment between registered users.
3. ANZ GoMoney in New Zealand is a cool new way on an iPhone to transfer money between friends.
4. ING Direct recently announced a P2P payment tool allowing customers to bump two phone against each other to pay. (Or at least that is what I understood from the cryptic press release)
5. Similarly Amex announced a P2P service called Serve recently that is available on Android and iPhones.

Many of the big names (Nokia, Apple, Google and of course Paypal), have eluded to be working on mobile person to person payment offerings, but I have not seen any of these working and I am not sure if anything will be forthcoming. So why is it so difficult to get something, that is clearly needed, widely adopted in first world countries? The challenge is to find a product and a strategy to launch that will create a tipping point that will lead to a critical mass of adoption. I am not sure what this will be.


Frans Stander said...

P2P payment solutions in the Emerging Markets had prooved itself after many years of entrepreneurial efforts and dedication; now it will only be a matter of time before this had been perfected by and for the Mature Economies.

As with many other innovative solutions which originated from the developing markets, it was only to be taken-up by the Mature Economies after such innovations had been prooved successful on smaller scale. Less risk taking by the big guys... they only need to "fine-tune" the solutions to cater for the specific market ... and there you go. No need for the Mature Economies to be the innovator and risk taker if the Developing Economies are prepared to venture and take these risks.

My opinion would be that P2P payments would eventually be more functional, secure and fine-tuned within the Mature Economies, even if it does take some time to get there.

Anonymous said...

Hi Hannes - PayPal has been live with mobile P2P for some time in many markets.

It operates via mobile app (Android, iOS, BB, Symbian). You can send a money request, or send money via the app to an email or mobile number, by Bump or via SMS.