Replacing cash & checks with p2p money movement

Actionable intelligence that drives Revenue & Profit in the eChannel…

© 2010. All rights reserved www.ecomadvisors.com

Paul McAdam

April 26, 2010

Presented at

NACHA PAYMENTS 2010

Replacing Cash & Checks

with P2P Money Movement

http://www.fisglobal.com/index.htm

© 2010. All rights reserved Page 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)



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%



The research was designed to survey “active” online banking customers

100%

88%

14%8%

40%

ActiveOnline Banking

ActiveOnline Bill Pay

ActiveMobile Phone

to AccessOnline Banking

ActiveMobile Phone

to AccessOnline Bill Pay

Have EverSent a

P2P Payment

“Active” defined as use within

the past 30 days



Survey respondent demographics

18 - 2413%

25 - 3414%

35 - 4423%

45 - 5422%

55 - 6413%

65 or over15%

Age

Male40%

Female60%

Gender

Under 25K 21%

25K – 50K 30%

50K – 75K 23%

75K – 100K 12%

100K+14%

Income



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



PayPal is the only widely recognized P2P payment brand

Consumer awareness of P2P payment services

4%

4%

10%

93%

POPMoney

Obopay

MasterCard Mobile MoneySend

PayPal



Most consumers are not aware of simpler methods of sending P2P payments

14%

37%

67%

Mobile phone number

Email address

Bank account and routing numbers

Consumer awareness of ability to send P2P using:



Discussion topics

P2P Payment Concept Test

ePayment Portal Concept Test



P2P Payment concept test



13%

23%

31%

13%

12%

25%

36%

52%

41%

33%

42%

38%

26%

16%

19%

19%

17%

24%

26%

19%

16%

16%

18%

19%

22%

25%

31%

33%

Purchasing items from a garage sale or flea market and paying the seller

Paying your babysitter, house sitter, dog walker, gardener, house painter, etc.

Splitting the mortgage or rent with your roommate, partner or spouse

Paying a friend back for your portion of a dinner bill (splitting check at a restaurant)

Splitting the cost of a gift (e.g. birthday gift, wedding gift, etc.) with co-workers, friends or family members

Sending money out of the country to a family member, friend, associate, etc.

Sending money to a son or daughter in college

Does not apply Definitely/probably would not Might or might not Definitely/probably would use

P2P payment use case scenarios



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

21%

48%Likely to use P2P

52%Not

likely to use P2P

10%1 of 7

10%2 of 7

7%3 of 7

7%4 of 7

6%5 of 7

3%6 of 75%

7 of 7



16%

18%

19%

22%

25%

31%

33%

19%

23%

28%

25%

28%

41%

51%

Purchasing items from a garage sale or flea market

Paying your babysitter, house sitter, etc.

Splitting the mortgage or rent

Splitting a dinner bill

Splitting the cost of a gift

Sending money out of the country

Sending money to a son or daughter in college

Definitely/probably would use with "does not apply to me" removed

Definitely/probably would use

Likelihood to use P2P payments with “does not apply to me” removed



Younger consumers are clearly much more receptive …

… Receptivity increases slightly with income

Sending

money to a

son or

daughter in

college

Sending

money out of

the country

Splitting the

cost of gift

Splitting a

dinner bill

Splitting the

mortgage or

rent

Paying

babysitter,

house sitter,

etc.

Purchasing

items from a

garage sales

or flea

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



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



Computer Mobile Phone

Online

Banking

Bill

Payment

Online

Banking

Bill

Payment

Sending money to a son or daughter in

college33% 34% 55% 63%

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

market16% 17% 32% 44%

Mobile banking consumers will be the early adopters



Type of Mobile Device Owned

Total Survey

PopulationFlip Phone

Slider,

Candy Bar

Smart

phone

Sending money to a son or daughter in

college33% 28% 32% 46%

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

flea market16% 13% 17% 25%

Smartphone owners are the most receptive



Discussion topics

P2P Payment Concept Test

ePayment Portal Concept Test



ePayment Portal concept test



Almost half of consumers would likely use the ePayment Portal

Definitely would not use

10%

Probably would not use

10%

Might or might not use31%

Probably would use29%

Definitely would use20%

Percentage of consumers likely to use ePayment Portal if

offered with current online banking and bill pay service



70% would likely use P2P payment services within the Portal

38%

45%

49%

62%

66%

70%

75%

88%

Have credit card charged for a P2P or bill payment instead of checking account

Purchase and/or load value onto a gift card

Have debit card charged for a P2P or bill payment to earn debit card rewards

Transfer money to an account I have at a different FI

Receive electronic bills instead of paper statements

Send a P2P payment

Make emergency bill payment to avoid a late fee

Make a bill payment

Payment types likely to use in the ePayment Portal, among those who expressed interest in the Portal



Computer Mobile Phone

Online

Banking

Bill

Payment

Online

Banking

Bill

Payment

Likelihood of using the ePayment Portal 49% 53% 76% 83%

Likelihood of accessing the ePayment Portal with your mobile phone

16% 25% 59% 74%

Mobile banking consumers will be the early adopters of the ePayment Portal



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



Customer incentives/rewards may drive increased ePayment Portal adoption

10% 10%

31%29%

20%

8% 8%

15%

24%

45%

Definitelywould not

use

Probablywould not

use

Mightor mightnot use

Probablywould use

Definitelywould use

More or less likely to use the ePayment Portal

Likelihood to use Likelihood to use with rewards

49% likely to use

the Portal

69% likely to use

the Portal if offered

an incentive



1%

3%

3%

5%

6%

7%

75%

Coupons/discounts from online retailers

Reduced fees on deposits and/or loans at the bank

Coupons/discounts from retail stores in your community

Preferred interest rates on on deposits and/or loans at the bank

Travel awards

Loyalty points that can be redeemed for merchandise

Cash back awards

Rewards and Incentives consumers identified as most valuable to encourage ePayment Portal use

Cash back awards are the most desired incentive



Some consumers may switch FI’s to obtain the ePayment Portal

Definitely would switch

10%

Probably would switch

24%

Might or might not switch

34%

Probably would not switch

22%

Definitely would not switch

10%

Among consumers interested in the ePayment Portal, 34% would be willing to switch to a FI that offers the Portal



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



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.

Leveraging the research insights:Conclusions and action items



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.

Paul McAdameComAdvisors

One Westbrook Corporate Center, Suite 300

Westchester, IL 60154

[email protected]

708.449.7743(office)

630.865.3135 (cell)

Atlanta office

Columbus office

Boston officeChicago office

3340 Peachtree Rd. NE

Atlanta, GA 30326

404.848.7709

5650 Blazer Parkway

Dublin, Ohio 43017

614.734.8372

95 Washington St.

Canton, MA 02021

781.784.1663

1 Westbrook Corp. Cntr.

Westchester, IL 60154630.865.3135


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Replacing cash & checks with p2p money movement

Economy & Finance