A Look at P2P Payments

Posted by Alison Arthur on 15 Oct 2019

Awareness and adoption of digital payments are at an all-time high. Mobile phones, connected devices, and other emerging technology all contribute to increased consumer demand for speed, efficiency, and convenience. Person-to-person (P2P) payments are becoming more popular as consumers switch from physical payment methods like cash and credit/debit cards to digital alternatives.

P2P payments were first made popular by payments giant PayPal, which made it possible to transfer money to other PayPal users via the web or mobile devices. The market soon expanded to include similar services from Google, Dwolla, and others, but PayPal continued to dominate the space. Now, Venmo and Zelle® are among the most popular brand names in the world of P2P payments. Here’s a closer look at both solutions.


Launched in 2009, Venmo quickly captured attention by offering users the option to send and receive money via bank accounts, debit cards, and prepaid cards without incurring a fee. Since its introduction, Venmo’s mobile-centric approach and social component have made it a front-runner in the P2P payments space.

Venmo was acquired by payment service provider Braintree Payments in 2012 before PayPal absorbed the parent company in 2013. PayPal recently announced that Venmo has 40 million users and is on pace to generate $300 million in revenue through 2019.


The success of P2P payments platforms like Venmo spurred innovation from the banking sector as well. Individual banks long offered their customers the ability to send and receive money to and from other customers. However, due to lack of centralization, none of these services were formidable competitors for solutions like PayPal.

A bank-owned consortium, Early Warning®, launched its own P2P payments solution in 2017 named Zelle. It uses alias-based authentication of account holders via email addresses and mobile phone numbers to connect users and facilitate near-instantaneous money movement without fees. In Q2 2019, 171 million transactions were sent via the Zelle Network, representing $44 billion in value. With almost 500 financial institutions contracted to join the network, Zelle is poised to have tremendous reach across US banking consumers.

What’s Next for P2P?

In an age when people might be more likely to carry a smartphone than cash and cards, P2P payments are a viable digital alternative to traditional payment methods. These solutions make it easy for consumers to split a restaurant check, pay a friend back for a concert ticket, or send a monetary gift. But P2P solutions are expanding beyond person-to-person payments. Zelle offers a disbursements solution as well as a solution for small businesses. And Venmo is expanding its reach into merchant acceptance and diversifying with its branded debit card. The next phase of P2P may see these solutions emerging as holistic payment solutions that can benefit both consumers and businesses.

*This is an update on an original post published September 2017

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Alison Arthur Product and Content Marketing Manager Alison creates timely product marketing and thought leadership content that keeps Alacriti's community informed on the latest developments in billing and payments technology. With a background in payments and financial services, Alison specializes in composing content related to technology, security, compliance, and overall industry trends.

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