Replacing cash & checks with p2p money movement

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Replacing cash & checks with p2p money movement

  1. 1. Actionable intelligence that drives Revenue & Profit in the eChannel… Replacing Cash & Checks with P2P Money Movement Paul McAdam April 26, 2010 Presented at NACHA PAYMENTS 2010 © 2010. All rights reserved www.ecomadvisors.com
  2. 2. Research Objectives NACHA and eCom Advisors partnered with FIS and PayPal to:  Understand consumers’ awareness of P2P payments, and their likelihood to use P2P payment services offered by a financial institution  Determine consumers’ understanding of the use cases of P2P payments, the likelihood to use them  Determine consumer receptivity toward a centralized money movement solution offered by their financial institution (ePayment Portal) © 2010. All rights reserved Page 2
  3. 3. Research Methodology  29 question, online survey  1,180 completed surveys  February 23 – 24, 2010  Sample obtained from Survey Sampling International  Estimated error rates: + 2.5% to + 3.1% © 2010. All rights reserved Page 3
  4. 4. The research was designed to survey “active” online banking customers 100% 88% “Active” defined as use within the past 30 days 40% 14% 8% Active Active Active Active Have Ever Online Banking Online Bill Pay Mobile Phone Mobile Phone Sent a to Access to Access P2P Payment Online Banking Online Bill Pay © 2010. All rights reserved Page 4
  5. 5. Survey respondent demographics Income 65 or over Age 100K+ 15% 18 - 24 Under 25K 13% 14% 21% 25 - 34 55 - 64 13% 14% 75K – 100K 12% 50K – 75K 25K – 50K 35 - 44 30% 45 - 54 23% 23% 22% Gender Male 40% Female 60% © 2010. All rights reserved Page 5
  6. 6. There is already strong awareness and utilization of P2P payments  66% aware it is possible to send P2P payment to an individual using a computer  26% aware it is possible to send P2P payment to an individual using a mobile phone  40% have sent an online P2P payment to another individual  41% have used either online bill payment or a P2P payment service to send an electronic payment directly to another individual within the past year – 24% reported doing this on at least a monthly basis © 2010. All rights reserved Page 6
  7. 7. PayPal is the only widely recognized P2P payment brand Consumer awareness of P2P payment services PayPal 93% MasterCard Mobile MoneySend 10% Obopay 4% POPMoney 4% © 2010. All rights reserved Page 7
  8. 8. Most consumers are not aware of simpler methods of sending P2P payments Consumer awareness of ability to send P2P using: Bank account and routing numbers 67% Email address 37% Mobile phone number 14% © 2010. All rights reserved Page 8
  9. 9. Discussion topics P2P Payment Concept Test ePayment Portal Concept Test © 2010. All rights reserved Page 9
  10. 10. P2P Payment concept test © 2010. All rights reserved Page 10
  11. 11. P2P payment use case scenarios Does not apply Definitely/probably would not Might or might not Definitely/probably would use Sending money to a son or daughter in college 36% 16% 16% 33% Sending money out of the country to a family member, 25% 26% 19% 31% friend, associate, etc. Splitting the cost of a gift (e.g. birthday gift, wedding gift, 12% 38% 26% 25% etc.) with co-workers, friends or family members Paying a friend back for your portion of a dinner bill 13% 42% 24% 22% (splitting check at a restaurant) Splitting the mortgage or rent with your roommate, 31% 33% 17% 19% partner or spouse Paying your babysitter, house sitter, dog walker, 23% 41% 19% 18% gardener, house painter, etc. Purchasing items from a garage sale or flea market and 13% 52% 19% 16% paying the seller © 2010. All rights reserved Page 11
  12. 12. 48% are likely to use at least 1 of the 7 P2P use case scenarios… … 21% are likely to use the majority (at least 4 of 7) of the scenarios 10% 1 of 7 10% 2 of 7 52% 48% 7% Not Likely to 3 of 7 likely to use P2P use P2P 7% 4 of 7 6% 5 of 7 3% 5% 6 of 7 21% 7 of 7 © 2010. All rights reserved Page 12
  13. 13. Likelihood to use P2P payments with “does not apply to me” removed Sending money to a son or 51% daughter in college 33% Sending money out of the 41% country 31% 28% Splitting the cost of a gift 25% 25% Definitely/probably Splitting a dinner bill 22% would use with "does not apply to me" 28% removed Splitting the mortgage or rent 19% Definitely/probably Paying your babysitter, house 23% would use sitter, etc. 18% Purchasing items from a garage 19% sale or flea market 16% © 2010. All rights reserved Page 13
  14. 14. Younger consumers are clearly much more receptive … Sending Purchasing Paying money to a Sending Splitting the items from a Splitting the Splitting a babysitter, son or money out of mortgage or garage sales cost of gift dinner bill house sitter, daughter in the country rent or flea etc. college market % Likely to Use 51% 41% 28% 25% 28% 23% 19% 18 - 24 153 166 185 185 171 164 173 25 - 34 108 122 128 129 123 134 125 35 - 44 91 98 93 99 101 114 109 45 - 54 92 87 77 85 72 78 89 55 - 64 89 67 84 56 73 51 57 65 & over 62 52 44 48 37 48 40 Under $50,000 93 95 97 96 102 99 89 $50,000 - $99,999 101 96 101 103 91 93 109 $100,000 and over 122 125 109 106 118 121 116 … Receptivity increases slightly with income © 2010. All rights reserved Page 14
  15. 15. P2P Payments: Benefits & features most important to consumers Craft your marketing communications around these points:  Trusted brand behind the P2P service  Online access to complete and secure payment history  Able to easily send a payment in only 2 – 3 clicks  Recipient receives funds electronically within a few moments  Flexibility regarding funding account (DDA or credit card)  Ability to send/receive payments with email address or mobile phone #  Reduces need to write & mail checks and carry cash 27% rated the ability to send P2P payments using their mobile phone as an important feature © 2010. All rights reserved Page 15
  16. 16. Mobile banking consumers will be the early adopters Computer Mobile Phone Online Bill Online Bill Banking Payment Banking Payment Sending money to a son or daughter in 33% 34% 55% 63% college Sending money out of the country 31% 33% 55% 70% Splitting the cost of a gift 25% 27% 51% 63% Splitting a dinner bill 22% 21% 46% 61% Splitting the mortgage or rent 19% 19% 41% 51% Paying your babysitter, house sitter, etc. 18% 23% 48% 61% Purchasing items from a garage sale or flea 16% 17% 32% 44% market © 2010. All rights reserved Page 16
  17. 17. Smartphone owners are the most receptive Type of Mobile Device Owned Total Survey Slider, Smart Flip Phone Population Candy Bar phone Sending money to a son or daughter in 33% 28% 32% 46% college Sending money out of the country 31% 25% 34% 44% Splitting the cost of a gift 25% 21% 25% 40% Splitting a dinner bill 22% 14% 20% 32% Splitting the mortgage or rent 19% 14% 17% 30% Paying your babysitter, house sitter, etc. 18% 19% 20% 35% Purchasing items from a garage sale or 16% 13% 17% 25% flea market © 2010. All rights reserved Page 17
  18. 18. Discussion topics P2P Payment Concept Test ePayment Portal Concept Test © 2010. All rights reserved Page 18
  19. 19. ePayment Portal concept test © 2010. All rights reserved Page 19
  20. 20. Almost half of consumers would likely use the ePayment Portal Percentage of consumers likely to use ePayment Portal if offered with current online banking and bill pay service Definitely Definitely would would not use use 10% 20% Probably would not use 10% Probably would Might or might not use use 29% 31% © 2010. All rights reserved Page 20
  21. 21. 70% would likely use P2P payment services within the Portal Payment types likely to use in the ePayment Portal, among those who expressed interest in the Portal Make a bill payment 88% Make emergency bill payment to avoid a late fee 75% Send a P2P payment 70% Receive electronic bills instead of paper statements 66% Transfer money to an account I have at a different FI 62% Have debit card charged for a P2P or bill payment to 49% earn debit card rewards Purchase and/or load value onto a gift card 45% Have credit card charged for a P2P or bill payment 38% instead of checking account © 2010. All rights reserved Page 21
  22. 22. Mobile banking consumers will be the early adopters of the ePayment Portal Computer Mobile Phone Online Bill Online Bill Banking Payment Banking Payment Likelihood of using the ePayment Portal 49% 53% 76% 83% Likelihood of accessing the ePayment 16% 25% 59% 74% Portal with your mobile phone © 2010. All rights reserved Page 22
  23. 23. ePayment Portal: Benefits & features most important to consumers Craft your marketing communications around these points:  Convenient -- can make all payments and transfers from one central location  Online access to complete history of all payment types  Safe and secure because it’s offered through my FI  A time saver  Reduces need to write & mail checks  Reporting tools to help me budget and spend within my means © 2010. All rights reserved Page 23
  24. 24. Customer incentives/rewards may drive increased ePayment Portal adoption More or less likely to use the ePayment Portal Likelihood to use Likelihood to use with rewards 45% 31%  49% likely to use 29% the Portal 24% 20%  69% likely to use the Portal if offered 15% an incentive 10% 10% 8% 8% Definitely Probably Might Probably Definitely would not would not or might would use would use use use not use © 2010. All rights reserved Page 24
  25. 25. Cash back awards are the most desired incentive Rewards and Incentives consumers identified as most valuable to encourage ePayment Portal use Cash back awards 75% Loyalty points that can be redeemed for 7% merchandise Travel awards 6% Preferred interest rates on on deposits and/or loans 5% at the bank Coupons/discounts from retail stores in your 3% community Reduced fees on deposits and/or loans at the bank 3% Coupons/discounts from online retailers 1% © 2010. All rights reserved Page 25
  26. 26. Some consumers may switch FI’s to obtain the ePayment Portal Among consumers interested in the ePayment Portal, 34% would be willing to switch to a FI that offers the Portal Definitely would Definitely would switch not switch 10% 10% Probably would Probably would not switch switch 22% 24% Might or might not switch 34% © 2010. All rights reserved Page 26
  27. 27. Leveraging the research insights: Conclusions and action items  Integrate P2P payments within your online banking and bill- payment applications – Emphasize simplicity, payment velocity and recordkeeping  Many of the consumers receptive to the P2P and the ePayment Portal concepts are Gen X and Y – Leverage social media to raise awareness and encourage utilization – Utilize the viral aspects of P2P payments to encourage customers to build payee lists  Rewards or incentives are not necessary to attract the early adopters to P2P and the Portal – But use of rewards/incentives (specifically cash-back rewards) should be considered to encourage later adopters © 2010. All rights reserved Page 27
  28. 28. Leveraging the research insights: Conclusions and action items  Integrate P2P payments and ePayment Portal services with your mobile banking services – Incorporate them into your new mobile banking rollouts  Focus on driving adoption among today’s active mobile banking and bill pay consumers – Twice as likely to adopt as traditional online banking and bill payment consumers – More forgiving of early rollout glitches than later adopters  Target and market to consumers who own the latest mobile device technology, in particular Smartphones and iPhones – Develop apps that enable transactions within 2 or 3 clicks and easy access to payee lists and transaction history. © 2010. All rights reserved Page 28
  29. 29. Contact information eCom Advisors provides executive consulting and research services to banks, billers, vendors and investors in financial services technology and online banking, billing and payments. Our consultants possess 175+ years of direct operating experience, and are considered leading experts in the industry. We help executives make their most crucial ecommerce management decisions. Boston office Chicago office 95 Washington St. Canton, MA 02021 781.784.1663 Paul McAdam eCom Advisors One Westbrook Corporate Center, Suite 300 1 Westbrook Corp. Cntr. Westchester, IL 60154 Westchester, IL 60154 630.865.3135 Atlanta office paul@ecomadvisors.com 708.449.7743(office) Columbus office 630.865.3135 (cell) 3340 Peachtree Rd. NE 5650 Blazer Parkway Atlanta, GA 30326 Dublin, Ohio 43017 404.848.7709 614.734.8372 © 2010. All rights reserved Page 29

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