Social media-based payments technology continues to gain traction as processing provider E2E Payments announced it will include social payment startup Buyvite as one of the payment options in its network, alongside traditional credit card, virtual terminals, mobile and other payments products.

Buyvite allows people to contribute money toward the purchase of an item or payment of dues, for a fantasy football league, for example. An organizer invites others with notification by Facebook, email or text. The potential contributors click a link to a page describing the purchase, a suggested contribution, and the way to send money, currently available through Visa, MasterCard or Discover.

Once the organizer decides he has enough money, he can either send the collected funds to his bank account or request a code that works the same as a coupon code.

Buyvite CEO Brandy Wimberly says her company charges per transaction which differ based on whether Buyvite is offered through another company’s network or if Buyvite deals directly with a single ecommerce site. Buyvite charges users a 3.5% transaction fee and its partners pay a 3% fee, plus a $0.30 administration fee, which includes the cost of the transaction processing. The contributor’s debit or credit card is not charged until the transaction is completed or the funds are sent to the organizer’s bank account.

Wimberly said it may adjust its fee schedule to cap user fees at $10 to ensure that the service is affordable for larger transactions. She added that Buyvite is also targeting smaller financial institutions that do not yet have a P2P service. A mobile phone application is in the works, she says.

The technology is similar to a product that Fiserv has developed, called Popmoney.

Wimberly says the social media aspect of Buyvite’s offer is key because of the generation of people using both smartphones and social media.

“Social payment goes deeper in terms of how you’re approaching people,” she says. “We feel like with social we can reach a larger audience because it’s been around for so long at this point. Our platform is based on social payments. We feel like we’re taking social commerce a step further. We’re strictly focused on being a payment option, but mobile definitely has a place in what we’re doing.”

Aite Group senior analyst Ron Shevlin says person to person payments have not taken off as fast as one might assume given the number of, impact and usage of online and mobile methods available.

“Demographically, despite the fact that Gen Y’ers are such a large group, other generations still outnumber Gen Yers,” he says. “Other generations have been using cash and check for P2P payments for a long time, and it’s tough to get them to change even if they are smartphone owners.”

“Banks for about five years now have offered some kind of electronic P2P capability and yet the adoption is still pretty low. Not only is there a challenge of displacing cash and checks, the mechanisms by which these things are done has not been sufficient to drive behavioral change,” Shevlin adds. “Smartphones make it easier but just because someone has a smartphone doesn’t mean they’re all of a sudden going to start using electronic P2P.”

Shevlin says the answer to increased usage may be marketing. Vendors and developers should market P2P payments as specific to one function, such as being the most popular way to pay for fantasy football league dues.

“The generic apps will struggle for awareness,” Shevlin says. “What was it that secured Paypal’s existence? It was eBay. If it wasn’t for eBay, who knows what Paypal would be today. Some sort of market will emerge and provide the support for the vendors and create awareness for the electronic P2P.”

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