The Potential Of Peer-To-Peer Payments
by Sanj Goyle – Co-Founder and CEO of BancBox
Considering The Potential Of Peer-To-Peer Payments, Current Solutions Are Just Pocket Change
The mobile payments industry has serious potential, attracting many large players such as PayPal, Square, and Google. The expansion and growth of the marketplace has increased the opportunities for businesses of all sizes. Mobile payments are quickly gaining traction, and one specific service is adding heavily to the appeal – peer-to-peer payments.
Currently, the focus of peer-to-peer payments lies on small payments, such as paying back the $20 you owe a friend. Why focus only on these small payments? Why not explore bigger payment opportunities? With the future aimed towards mobile, there is an opportunity to introduce a whole new suite of features. If the future is mobile, why don’t we grow these services to align with all aspects of our lives? Why not use mobile payments to purchase a car, a house, or other big ticket items?
The reason is simple – risk aversion. Small payments carry little to no risk, while large payments signal a much larger risk. People don’t want to risk sending a significant amount of their earnings through an electronic system to someone they don’t know. The realization of this risk may also be leading to a solution, one closer at hand than we once thought. It’s possible to mitigate the risk with new, more sophisticated payment solutions, which allow traditional financial systems the technology to bridge the digital and physical world through mobile. For example, a programmatic independent third party escrow service would offer the means to solving yet another dilemma in today’s payments system.
Today’s payments system relies heavily on trust. Trust that the system is tested, trust that it works, and also trust in those involved in the transaction. Escrow services can provide security in managing funds, and removing the need to place your trust in an unknown individual. While an escrow service would offer one potential solution, there are of course other ways to achieve this desired trust factor. With all of the information available in today’s mobile world you can take the time needed to conduct an extensive background check, researching the parties involved in the transaction. As peer-to-peer payments become the norm, there will be even more approaches to solve these problems.
Imagine the future once these systems become engrained in our everyday life. You want to sell your car and list it online, the buyer comes to see the car in person and is even ready to make the purchase. How do you arrange for the payment? Do you accept a large, cash payment, do you accept a direct transfer, or do you put your trust in the stranger’s personal check? A buyer can get a cashier’s check and return, but there is still potential for cases of bank check fraud. If peer-to-peer payments become the norm, all you would need to collect the payment would be a mobile payments escrow service. You could quickly and easily pay your college tuition, rent an apartment, purchase a car, all through your phone.
Advanced solutions for peer-to-peer payments are quickly changing the payments space, but in the end, what will mark success for those in the industry? Today’s payments are teeming with innovation, but there is another side to the delicate balance of a successful mobile payment solution- keeping up with the quickly evolving rules and regulations in this growing space. For those invested in evolving with this space, they will have to keep an eye towards compliance as they continue to keep pace with the industry around them.
Regulatory and compliance issues are the foundation for any Fintech company, and essential to disruption in financial services. The security and reliability of a partner from a compliance angle is essential to preventing money laundering through a mobile peer-to-peer platform. Players in this space also need to find a financial services partner to give them money transmitter compliance, in addition to their obligations to perform essential checks on both parties to a transaction. If the security and reliability of the space earns the trust of the everyday mobile user, the possibilities are endless to what can be accomplished on your phone.
Establishing a preeminent peer-to-peer payment application is an elusive goal that many have chased in what is a fragmented market. The company who can navigate the regulatory and compliance issues, and establish a product market fit established on user trust will reap the benefits of a growing market. As the Fintech industry continues to work with companies to build reliable and compliant products, user trust will continue to be gained as companies display the ability to remain compliant and combat money laundering and fraud. The company who finds the product and executes it against the issues mentioned above will see a bright future of growth and a revolution in what is possible in mobile payments.
About Sanj Goyle
Prior to BancBox, Sanj spent several years in Yahoo where he led the performance marketing team that developed and operated Yahoo’s Cost-per-Lead (CPL) line of business that launched multiple products (such as Yahoo Tagline in Yahoo Mail, Yahoo Cross Sell in Yahoo Games etc).
Sanj started his career as a corporate attorney specializing in Corporate Securities, M&A, and Privacy and has considerable experience with the privacy and legal issues related to the marketing of consumer finance products. Sanj is a licensed real estate broker in California, and is a Certified Information Privacy Professional. Sanj graduated from Boston University School of Law (magna cum laude) and Duke University.
Money Picture by StockMonkeys.com
