The commercial that shows a landlord using Apple Pay Cash and iMessage to pry rent out of a tenant is meant to elicit a chuckle, but it also shows how P2P providers must aggressively communicate the capabilities of their apps.
The challenge with a P2P system that's built seamlessly into phones and messaging apps is reminding consumers that it's there to begin with. The eviction ad is part of an evolution toward broad financial services that's probably necessary for the P2P and social group payments market to remain relevant — particularly as the novelty of texting people money for drinks wears off.
P2P services like the PayPal-owned Venmo, the bank-owned Zelle and newer entrants such as Apple Pay Cash are enjoying fast growth, but are also looking for other services to turn introductory adoption into more sustainable use. The picture for P2P is not as rosy as it would appear based on uptake stats, since these apps are essentially growing from near zero, and enrollment doesn't equal consistent use or incrementally larger-dollar transactions.
"P2P is still in its hyper-growth stage as is evident from both Zelle and Venmo volumes that have been published, but I believe there will need to be more focus around incenting the ongoing use so P2P is more of a habit than an occasional use," said Sarah Grotta, director of the debit and alternative products advisory service at Mercator.
Diversification has been a goal for Zelle since the app was called clearXchange, and PayPal has steadily pushed new use cases for Venmo, such as a retail payments play. Despite its popularity and brand recognition, Venmo has struggled financially. And Apple Pay Cash is still an introductory product that's looking to build its P2P user base.
This is particularly relevant as apps like Venmo come under fire for privacy concerns. If people don't see a need to keep using Venmo, Apple Pay and other P2P apps in their daily lives, they may find it easy enough to abandon them amid any bad publicity.
But the lack of privacy could be a good thing in certain use cases.
"The social posting creates transparency, a public ledger and peer pressure that incents and documents the repayment and collections process," said Richard Crone, a payments consultant.
Social payments enable personal credit "unions" among friends via the ledger, according to Crone. Informal and transactional credit is possible, along with a "big data" feed across these unions that can be monetized similar to how Facebook monetizes social connections.
Using the social payment rails to support lending would also be a way to reach younger consumers who have not embraced traditional banking may come to prefer social payment rails as a way to raise money to start a business or cover a major expense. In the case of the Apple ad, it's easy to imagine an informal loan among roommates as an additional part of the transaction thread.
"The social threat serves as the loan agreement," Crone said, adding rent is a major use case for P2P services, which is why Apple is promoting it.
While P2P is advertised as having broad-based appeal across generations, that's largely a forward-looking wish from the apps' operators. Most social and P2P payment apps are still overwhelmingly used by college students and young professionals, and the introduction of financial services will have to stand on the shoulders of how this generation uses the technology.
"Taking a look at those consumers who are using P2P today on a weekly basis or even daily basis would be a good place to start understanding habits and then building a greater utility around those payment types would be a good place to start," Grotta said.
A utility could be built in to help the small landlord send reminder messages through the P2P service before rent is due. Or create reminders for certain dates when a user may want to send a gift, Grotta said. "I suspect the non-bank P2P services will develop these capabilities first."
Many of the P2P or social apps are built on bank products, which is why their use cases are starting to echo traditional bank transactions, said Gareth Lodge, a senior analyst at Venmo, so the lines are blurring.
"Rent isn't P2P; it's P2B. So this underlines that payments are only part of a larger value chain," Lodge said. "Whatever the use case, recognizing this and then providing an easier experience across this value chain will mean they'll be able to charge value-added levels of fees and/or win more business."