Advanced Payments Report 2016

In the US, – a mobile P2P payment service and part of the PayPal group reported total payment volumes A key issue that could tip the balance in favour of banks of $2.11 billion, a 200% year-over-year increase in Q3 2015. is security. Six Swedish banks decided in 2012 to leverage Venmo has even engrained itself in popular vernacular the country’s banking infrastructure to launch , in the US: “I will pick up the tab and you can Venmo me a P2P payment service which has 4.5 million users (in later”. Square Cash, clearXchange and Pop Money are a country of 9.5 million inhabitants). other popular P2P payment options Other similar initiatives such as Paym offered by both new entrants and in the United Kingdom have achieved banks. moderate success, having been used for approximately 0.8 million Payment messaging transactions with a total value of £42million in 2015. A common trend in P2P payments in Asian markets is their integration with messaging apps. WeChat, the most Cross-border popular app in China with 550 million personal payments active users, launched its payment feature “International” or “cross- in 2014 and it has been used by 80% of border” P2P payments, also referred its users to date primarily for micro- to as international remittances payments and mobile games. or international money transfers, In 2015 during the Chinese New Year, represent a very different industry WeChat users sent more than 1 billion dynamic. The industry is presently virtual ‘red envelopes’ – a Chinese gift dominated by Money Transfer Operators tradition - filled with money within 17 hours. (MTOs) such as Western Union and MoneyGram and banks A popular option was sending an envelope to a fixed who have been facilitating payments via accounts number of recipients within a group and the first to click across markets for many years. on the link would earn an unspecified portion of the total International remittances are highly attractive for several envelope value. Tenpay, one of the two main wallets reasons: in China, supports this payment function on WeChat. WeChat, currently supporting nine currencies including  High Revenue Potential: Remittance service providers USD, GBP and Euros, is adding B2C and overseas payment trusted by their customers are able to charge fees as features. well as earn foreign currency conversion revenues. Price comparison sites and many non-profit entities monitor Today, WeChat absorbs most of the transaction costs. remittance prices to ensure consumers are aware of what However, as of March 2016, a fee of 0.1% will be levied they are paying but many tend to trust their providers on digital transfers to bank accounts when the sum even if they know there are cheaper alternatives available exceeds 1,000 yuan (approximately US$153). P2P payments between WeChat accounts will remain free of charge.  Stable Demand: Remittances are necessary and KakaoTalk in South Korea or in Japan are also represent the primary income for families back home. examples of instant messaging apps with P2P payment Many migrant workers live on minimal budgets so that services. they are able to send most of their earnings back home to their families. Even better-off migrants need to remit Payments over Facebook Messenger may also gain funds to pay for mortgages or other obligations at home momentum thanks to Facebook Messenger’s huge user base which is similar to WeChat. Apple is also looking  Expanded Opportunities: Beyond individual to gain a foothold in P2P payments. Apple lodged a remittances, companies can focus on international patent application in 2015 that focused on P2P payments payments that businesses have to send to suppliers in encryption. Rumours suggest that the transfers could be other markets. These transactions represent higher linked to Apple’s iMessages. transaction values and can be more profitable

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