In the closing months of 2019, there were several reports released that touted the current and projected growth of the peer-to-peer (P2P) payment solutions market. Solutions like Zelle, Apple Pay, and Venmo were overwhelmingly increasing in adoption by consumers. There were high expectations and we have no doubt they were accurate. But, in November of last year, we had no idea what 2020 had in store.

Mobile payments are making person-to-person transactions incredibly simple and efficient. With a few clicks of an app, members can pitch in on a birthday gift, pay their landscaper, or check out at the drugstore. With the increased demand, there are plenty of providers popping up to meet it but not all are created equal. Some apps require you to hold funds in the app, while others link directly from bank account to bank account. While these payment channels may be highly convenient, it's important to educate your members on ways they can make sure their money goes where they want it and that they receive the money they are owed.

With a surge in demand and adoption of digital payments, including mobile person-to-person (P2P) payments, why are credit unions so ideally suited to benefit from this change? The keys can be found in the credit union difference.

In 2008, we saw the rise of the Gig Economy, an army of freelance workers trying to find whatever work they could during a recession when unemployment soared. It was expected to redefine the workforce and shake the foundations of traditional careers. Ultimately, the movement didn't hold out as expected, and the freelance work shifted more towards services work, like driving and delivery. In addition, the technology just wasn't there to drive mainstream adoption outside of major cities. But in 2020, the global pandemic, skyrocketing unemployment, and looming recession may have created the catalyst for an even broader gig economy to finally hit its stride. Simultaneously, the "socially distant" environment has shown options are needed to reduce contact while staying connected and working. This perfect storm of forced adoption, increased demand for gig work, and the need for contactless transactions - with seamless user experience - necessitates a responding change in the way we pay each other. Financial institutions (FI) need to get on board quick or they'll be left in the dust of their competitors. Enabling mobile payments, person-to-person (P2P), securely and simply is key.

From blisters to brake squealing, unless you're trying to start a fire, friction is rarely a good thing. Friction, as a force, works directly against motion. This type of interaction is becoming a very popular reference when it comes to user experience, or how consumers interact with your products and services. People are busy, people are on the move, and anything that slows them down runs the risk of being abandoned and a better solution being sought. The same can be said for payments. If your members feel that they have to take more steps than necessary to transact with your credit union, then they will look for financial solutions elsewhere. So, how can you reduce friction for your members?

Making members aware of Credit Union digital products & services is half the battle. Members will use the tools that they know about and when branch hours are limited or eliminated members need to be aware of their options. When people are coming into the branch less frequently, be sure to keep sharing messaging in other ways to keep them aware of your offering.

As if! Compare how members make payments today to how they made payments 25 years ago. In the 1990's, bills were paid primarily through snail mail by check, or perhaps paid in person with cash at a designated payment location. Many people still received traditional paychecks, and it was not uncommon to be stuck behind someone paying for groceries with a paper check. A stolen credit card could be as detrimental to your cash reserves as misplacing a highly valued beanie baby. Whatever! How times have changed.

In July of 2019, a report was released that found over 1 million internal transfers occurred in that month alone in US Financial Institutions, making up 67% of all money movement that month. The surge in P2P (Person-to-Person) payments continued, while A2A (Account-to-Account) payments between accounts at different financial institutions also rose, witnessing 2.35% of active digital users digitally transferring funds between accounts at various banks/credit unions. Not surprisingly, the overwhelming majority (77%) of those transfers came from smartphones. For Credit Unions, this is another strong indicator that mobile app development and enhancements are becoming a must have for members.

Holiday shopping is almost upon us! Black Friday is Nov 29th and many of your members will likely plan for this infamous holiday event by combing through online ads, emails and in some cases, old-fashioned newspapers. All that research and strategy can pay off if they happen to score a crazy price on electronics!  While there’s no doubt some planning took place beforehand, very few people would think of the technology they will use to make these purchases. Their mobile wallet? A wearable-based payment system? Is using a physical credit card going to become a thing of the past?

For the past several years, the financial industry has claimed the P2P market was finally going to take off. While P2P payments have certainly continued to grow in popularity, they have not reached the heights that FIs anticipated. However, in the past year, P2P platforms have experienced immense growth, especially among big banks. Zelle launched back in September of 2017 and in 2018 they have made tremendous strides with larger FIs. Zelle is already working with 51 big banks and 200 more are under contract to launch in the coming months. However, with larger FIs under their belt, Zelle is also looking to win the hearts small and mid-sized credit unions.