Peer-to-peer (P2P) technology continues to be one of the hottest trends in payments. Services like Zelle®, Venmo and CashApp have taken the age-old, familiar practice of exchanging money with friends and family and turned it on its head.
As cash usage declined during the pandemic due to lockdown mandates and rising hygiene concerns, P2P payments usage exploded. According to the Federal Reserve Bank of San Francisco, the share of person-to-person payments made with mobile apps nearly doubled between 2020 and 2021, from 15% to 29%. Meanwhile, cash usage for such transactions fell below 50% for the first time in five years. Although cash remains popular, consumers are getting increasingly comfortable with using their smartphone to initiate payments, and the end of the pandemic hasn’t slowed this trend down.
Forecasters predict total U.S. P2P mobile payment transaction volume to reach nearly $1 trillion in 2022, a 23.5% increase over 2021. Much of this growth is being driven by Zelle®, a popular and easy-to-use P2P platform that is open to virtually anyone with a U.S. bank or credit union account. The Zelle Network®, operated by Early Warning Services, LLC, enables enrolled members to send or request payments using just an email address or U.S. mobile phone number. Members love the fast and easy Zelle® experience, a key reason why consumers and businesses sent 1.8 billion payments over the network in 2021, an increase of 49% over 2020. Total payments value of money sent with Zelle® is double that of its nearest P2P competitor, according to Aite-Novarica Group.
P2P platforms like Zelle® are a powerful way to meet members where they are today, helping to increase member engagement while ensuring they stay within the credit union’s digital banking ecosystem for all their payment needs.
Rising P2P Fraud a Growing Challenge
As the popularity of P2P payments has grown, fraud and scams targeting these newer payment methods have increased as well. According to a recent survey, 29% of respondents say they have been a victim of a P2P payment service scam, or know someone who has.
Credit unions need to remain vigilant for scammers and criminal rings. As with all types of fraud, a multi-pronged approach is essential to mitigating losses for members and the credit union.
EMV® 3-D Secure (EMV 3DS) is a powerful way to prevent fraudulent activity before it occurs, whether through P2P or other methods like BIN attacks and account takeover. EMV 3DS is a globally deployed technology supported by all major payment networks that helps reduce fraud for digital card-based transactions, including online and e-commerce payments. EMV 3DS offers secure one-time passcode (OTP) as an optional additional layer of protection that helps verify a member’s identity at the point of purchase.
When it comes to P2P scams, member education represents a credit union’s best first line of defense. Open and regular communication with members about the latest fraud trends and social engineering scams can help. Warn them about “friendly fraud” schemes where fraudsters request an unwitting victim to deposit a check in their account and then send the funds back to the criminal through a P2P app. In these scams, the check turns out to be illegitimate, and the victim (or the credit union) ends up on the hook for the missing funds.
Credit unions should also remind members to protect their account information and passwords, never give out authorization codes or information to someone who they think is calling from their credit union and to only use P2P services with people they know and trust.
Getting Started with Zelle® P2P with Co-op
Zelle® is a fast, safe and easy way for members to securely send, request, receive and split expenses between friends, family members and others they know and trust, right from their smartphone (and typically in minutes between enrolled users). Zelle® provides consumers with the simple day-to-day features they prefer, including direct account-to-account payments and a fast way to send and receive money.
For credit unions, Zelle® is more than a mobile payment solution. It’s a powerful branding and engagement tool that allows you to be there for members during common everyday moments – from splitting the cost of a lunch tab with friends to paying the sitter or paying their rent. Zelle® transactions also represent an all-new source of member data for the Co-op community, insights we are leveraging to secure and enrich future member experiences.
It’s easy to get started with Zelle®. Co-op has already invested time and resources on your behalf, working closely with our technology partners and Early Warning Services, LLC, the owner and operator of the Zelle Network®. As a result, we’ve laid the technological foundation for you, delivering a platform that makes Zelle® efficient, easy and affordable for credit unions to implement.
The original article P2P Allows Credit Unions to Be There for Everyday Member Moments can be found on Insight Vault.