Big Banks Show Major P2P Payment Growth

Big Banks Show Major P2P Payment Growth

Peer-to-peer (P2P) payments are the act of one person electronically sending money to another person through a platform. While most people still use cash or write checks, there is no denying that the use of digital platforms for P2P payments has exploded in recent years. While tech companies such as PayPal Holdings Inc. (NASDAQ: PYPL) have thrived with P2P payments, traditional banks and smaller fintech companies have struggled to keep up.

This might be finally beginning to change as several big banks, including Bank of America Corp. (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM), and Wells Fargo & Co. (NYSE: WFC), called out Zelle's big launch this past quarter for serving as a catalyst for P2P growth. Zelle is probably best thought of as a shared P2P platform on which nearly all domestic big banks, and several smaller ones, are currently participating.

For banks, one of the major problems in gaining traction with P2P payments has been a fragmented market. Until recently, if I want to electronically send my friend $15 to cover my share of pizza, I couldn't have done that using my bank's app unless my friend and I both used the same bank. With PayPal or its subsidiary Venmo, there is no need to share a bank, smartphone manufacturer, or operating system. For banks, Zelle looks like it might have largely solved that problem.

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Source: Fool.com