P2P Payments - the Future? (1 Viewer)

This thread is about discussing the future of Person to Person payments. It is not about how to accept and pay cash at your next home game.

I believe this is one of the biggest markets where the outcome is unknown. There are many players and no one can seem to get ahead. Just to name a few that come to the top of my head - Venmo, PayPal, Zelle, Square. I'm sure Facebook, Google, Apple, Android, Amazon, and other top tier technology firms have ideas. And of course, every financial institution has a room of bankers brainstorming this. And I am sure there are many other smaller players too.

Personally, I can't wait till I don't have to carry cash - bills or change around at any time. I prefer not to carry bills today in my wallet, and I can't stand to carry change in my pocket. Even when I was a kid in the 70s, I saw no purpose of carrying pennies around, they bought virtually nothing. They were just weighing me down, so I intentionally let go of them at my earliest convenience.

How many have had this conversation? "Can you do Venmo? No, but I can do Zelle though", or something like that. There are just too many different options. What have you used?

What is the current state? PayPal has been around forever. Who are the competitors? Who has the lead?

What does the future state look like? Same players, different players?

Will the consumers decide or will it be something crammed down the consumers throat?

How long will it take?

How much will it cost? Will someone give it away for free...just to start charge fees later when they get a virtual monopoly? ...a company wouldn't do that, would they...

What is going to happen in the US? What is going to have in Europe? Asia?

Will cash ever go away entirely? I doubt it, so lets not talk about that here.

Clearly there has to be some market consolidation to reach critical mass and for these type transactions to be common place between people.


And once we figure this out, nobody will ever need to bring cash to a home game again, or take a late night trip to the ATM, or be able to say "can't play anymore, that's all the money I brought". I can't wait!

I think and hope the future of payment will be facilitated by the banks. PayPal is a frigging huge rip-off. I can send money direct from my bank account to anyone in Canada for free. Seeing that it is a huge market I'd expect that a small fee will be incorporated and international transfers the "next" big thing.

Forget P2P payment processors. There are cryptocurrencies that will eliminate the need for banks and use smart contracts to handle completion of payments. My hope is that things start more that direction and eliminate the need for the banks in the middle.

I personally use Revolut and it’s great! Gaining lots of interest in the EU. They are planning to hit the North America and Australia soon so definitely try this one if You have a chance (y) :thumbsup:

I am comforted by the fact I have a roll of hundo’s in my pocket.

I think we are going to see a great deal of churn and false starts before the marketplace and government(s) settle on a new forms of P2P payments. There are some thorny issues to be resolved.

It has to be easy and cheap to use. Current payment systems burden the businesses with the cost and administration of payment systems, which are imbedded in the prices of things we buy. Who is going to pay for a widespread P2P system? There was a time that the float could pay the costs, but that doesn't work so well with short term interest rates at current levels. Maybe these could come with a monthly service charge. Or a transaction fee. Or bundled with other banking / financial services.

There are all sorts of legal and financial friction when using crypto securities. These are terrible "stores of value" at the moment ( i.e. the prices change substantially every day ). Every transaction requires tax reporting. The interfaces are opaque and lack accountability if things go wrong. Currently it takes days to weeks to fund some transactions. There are imbedded costs that are concealed in inflationary creation of new coins. Few people take cryptos for business transactions and even fewer take them for P2P transactions. Bottom line, there are numerous and huge problems to resolve.

A P2P system has to have widespread acceptance. We can't get to the end of a meal and have ten folks trying to settle up using several different payment methods. We already see problems in the "old school" systems where not all credit cards are accepted. I know Wells Fargo checks aren't welcome in the circles I frequent - special fees for non-account holders. We can't have a P2P system where the users negotiate over which methods to use that have the lowest costs for each user.

If a P2P system strays far from the current banking system, it creates another layer of friction for the user. Imagine if paypal made you keep funds in paypal's system rather than draw from your bank. Now imagine that a P2P service has an exchange rate if it isn't denominated in the local currencies.

People have mostly forgotten to worry about "how safe is my money"? Distinct from "how well does the system deal with fraud"? A wide spread P2P system is going to have a lot of money in its float. Well worth stealing. Or well worth using as collateral to finance other ventures. Is there going to be insurance similar to FDIC? We have state and federal banking regulations for reasons many people seem to have forgotten about. A deregulated P2P system is virtually certain to end badly for its users.

I am paranoid. The idea of an electronic trail for every transaction I have makes me nervous. The idea access to my assets could be cut off, leaving me with little / no recourse is even worse. You don't have to be that old to remember the bad early days of paypal where your account could get frozen and leave you with serious sums of money locked in paypal's hands. No thank you sir! I would not willingly get back in a similar situation.

I think the most likely next iteration of P2P payments will look a lot like "paperless" checks and be managed by our banks. That will exclude millions of people without a bank account ( roughly 7% of the population or twenty million Americans )

Lots of opportunity in this area paired with lots of problems to solve first -=- DrStrange

Bitcoin has solved many of the problems. The remaining issue is instability of the currency. If there was a user friendly interface BTC would be my go to.

Its fantastic and free anywhere in the world. I can send 2 or 2k.

Canada is great as we can make epayments via bank account sent to an email address and its free.

Paypal is antiquated. I dont know anyone that uses Paypal outside chipping.

Lemonzest said:

Paypal is antiquated. I dont know anyone that uses Paypal outside chipping.

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The entire eBay community for one.

DoubleEagle said:

The entire eBay community for one.

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oh yeah those 2 or 3 people that still use eBay...

I agree with @DrStrange. I'm full of distrust.

I'd be perfectly happy with a universal p2p mechanism within the US banking system. Give me a currency backed by the full faith and credit of the US, and bank deposits insured by the FDIC.

Cryptocurrencies are regulated by, um, I meant to say that cryptocurrencies are backed by, -- Oh, wait . . .

abby99 said:

I agree with @DrStrange. I'm full of distrust.

I'd be perfectly happy with a universal p2p mechanism within the US banking system. Give me a currency backed by the full faith and credit of the US, and bank deposits insured by the FDIC.

Cryptocurrencies are regulated by, um, I meant to say that cryptocurrencies are backed by, -- Oh, wait . . .

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The problem with this is it is only domestic. We have the etransfer system in Canada which works great. However if I want to send money to Europe or USA I am back to the drawing board.

I am assuming any solution from the big banks will be limited geographically.

I trust BTC more than USD if you look at the structure. To me BTC makes more sense long term. BTC quantity is limited. Fed can and does print money when they want.

Also the US has tons of debt and a complex political and economic situation. BTC doesnt have to deal with any of that...its just a currency.

Quicksilver-75 said:

I think and hope the future of payment will be facilitated by the banks. PayPal is a frigging huge rip-off. I can send money direct from my bank account to anyone in Canada for free. Seeing that it is a huge market I'd expect that a small fee will be incorporated and international transfers the "next" big thing.

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+1. I don't know why anyone would go through a secondary processor when you can emt direct from your bank account for p2p transactions. I've had people use emt to rebuy in my cash games. Generally any cash transaction in Canada that is more than arms length is done with emt.

Lemonzest said:

The problem with this is it is only domestic. We have the etransfer system in Canada which works great. However if I want to send money to Europe or USA I am back to the drawing board.

I am assuming any solution from the big banks will be limited geographically.

I trust BTC more than USD if you look at the structure. To me BTC makes more sense long term. BTC quantity is limited. Fed can and does print money when they want.

Also the US has tons of debt and a complex political and economic situation. BTC doesnt have to deal with any of that...its just a currency.

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I'm confident that the world's major banking systems can and will work this out. Reminds me of wire transfers, just for smaller amounts.

abby99 said:

I'm confident that the world's major banking systems can and will work this out. Reminds me of wire transfers, just for smaller amounts.

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Like the debit world after cirrus allowed international bank withdrawals. It's curious though why the major banks haven't been all over this ahead of now...I mean PayPal has had the monopoly on this gig for better than a decade now and no one thought to better this service?

abby99 said:

I'm confident that the world's major banking systems can and will work this out. Reminds me of wire transfers, just for smaller amounts.

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The issue is fees. Banks arent commonly rolling out great new services for free.

Skype wasnt invented by AT&T as they had no motivation to do so.

If the banks figure something out great...just not holding my breath.

As I mentioned canadian banks came up with epayments which are good.

Lifted from 538.com - - - A Wall Street Journal analysis of 1,450 digital coin offerings — instances where firms raise money off of a new cryptocurrency — found that in 271 cases there were red flags like plagiarism in investor documents, missing or fake executives or implications of guaranteed money. Those 271 iffy offerings have pulled in over a billion dollars from investors, which is an enormous chunk of the about $5 billion raised by the 1,450 coins studied.

This illustrates one of the hurdles for using cryptos as a P2P solution. Many possible coins used, most incompatible with each other. With the relative and absolute value of the coins wildly fluctuating.

I had no idea there were 1,450 different crypto offerings in the market. I was not surprised that 20% of them were likely frauds on their faces, and will not be shocked when most of the offerings end up worthless.

The critical question is whether a couple of cryptos remain viable after the dust settles or if even the most venerable like bitcoin join the ranks of the wooden nickel.

abby99 said:

I'm confident that the world's major banking systems can and will work this out. Reminds me of wire transfers, just for smaller amounts.

Click to expand...

I believe this is what Zelle is. It is supposed to be the combined partnerships of all the major banks plus a lot of the smaller ones. The banks should have an advantage here - trust, scale, access, similar offerings. Zelle should be dominating. Zelle may have some significant market share, but why isn't it more? Are they marketing it properly (or at all)?

Zelle and Venmo both unavailable to Canadians (I assume other places as well?)

I have heard good things but its half a solution IMO if it is only domestic.

I don't see Bitcoins ever becoming status quo for P2P payments.

1. Zero protection. If your credit card is stolen, you make a single call and lose nothing. Even if the card is used before you can get to a phone, most (all?) credit card companies will delete the charges that aren't yours. If someone hacks you Bitcoin wallet, you lose everything. Absolutely everything. This has already happened a number of times - One Bitcoin trader, Mt. Gox, was hacked for $65,000,000. I don't have that much to lose.
2. Still in protection: A hold-up can take all the money in your wallet. That can be a damper to anyone, but all they get is what you currently have in your purse or wallet. ATMs began restricting withdraws so a criminal couldn't put a gun to you at the ATM and empty your account. Bitcoin has no bank to pass those restrictions, so make it known that you use BTC, and you may as well be waiving a fat roll of hundos around, because one knife or gun can clean out everything you have.
3. BTC is a replacement for your local currency. You have to convert your dollars (Euros, Yen, Kroners, whatever) to BTC before using it. Unlike PayPal, which is connected to a bank, which my paycheck is directly deposited into, BTC requires an extra step to move money around.
4. Back to protection: If you are unhappy with a purchase made with PayPal, you have recourse. Same thing for those using a credit card. Sure, resolving these issues may take time, energy, and may sometimes even fail (be denied), your BTC payment for chips that never arrived? Gone. Broken chips? Too bad, so sad. BTC is the ultimate buyer beware.
5. Nine years and counting - BTC has been around for 9 years. It has been used as a speculative investment (gambol) and in limited actual transactions, but still has not really caught on. It's price still wildly fluctuates, most people over the age of 40 don't even know how to get Bitcoins. In this electronic age, 10 years is plenty of time to make your app "something", yet Bitcoin is still a relative "nothing".
6. It’s not actually that good a payment system  - Visa can handle sixty thousand transactions per second, while Bitcoin historically taps out at seven. Imagine a world where millions, even billions of people are using Bitcoin. "Let's split the bill" "OK, now let's wait 3.5 hours for the transaction to clear". Sure, things will eventually get faster, but the spread of information throughout the blockchain takes more time than going to a single source. That requires more bandwidth, and more time.
7. The infrastructure does not exist for it to be widespread. For those seven transactions a second, Bitcoin is already estimated to use 35 times as much energy as Visa. If you brought Bitcoin’s transaction volume up to Visa’s it would be using as much electricity as the total output of 5,000 nuclear reactors.
   
8. Government is sometimes good - Yeah, I hate paying taxes as much as the next guy, and wish the government would let me do as I wish with my money. But there are government regulations for a reason. How do you track down drug dealers and child pornographers? Either through the electronic paper trails left by standard banking transfers, or by interrogating anyone trying to transport excessive amounts of cash. The blockchain does an end-around by obfuscating that electronic paper trail. Bitcoin will be the stronghold of drug dealers, child pornographers, and terrorist supporters. Who really wants to be associated with that?

The volatility of crypto is part of the concern. I would hate to buy $1000 worth of bitcoin, then go to spend it a week later and find out it's worth $600.

Have any of the crypto's pegged their value to the US dollar?

More generally, I can't believe gov'ts will ever give up control of currency.

Not controlling currency and transactions means no ability to tax. Gov't is a crack whore when it comes to their addiction to $'s. Crypto's are tolerated now because they are small, but at some point the US gov't will make them illegal to "save the public". This I am 100% sure of. Not saying crypto's will be eliminated, they'll just be illegal.

In my intro, I didn't even mention crypto-currencies because I have presumed everyone would still pay with the standard currency of the country. I know some people are intrigued by them, but to me, crypto-currencies will never become mainstream. Even if you ignore the issues of stability/volatility and security, why go through an currency exchange. Joe Schmo will not use it. It has to be simple and straight forward, at least in America. American's have enjoyed a stable currency (even with all the current fiscal situations we won't delve into), so I don't see them using something arcane they don't truly understand.