A report by Javelin Strategy and Research takes an in-depth look at mobile person-to-person (P2P) payments and transfers, an emerging mobile banking service, and its inevitable shift into mainstream banking practices. According to the report, most consumers want high-speed transactions, but only one in ten consumers is willing to adopt mobile P2P payment services.

"Mobile P2P payments and transfers stand to transform the mobile landscape. Whether it’s how we buy things, interact with friends and businesses or modify our trust and reliance on mobile devices -- all the factors exist: economic, social and technological,” said James Van Dyke, president and founder of Javelin Strategy & Research. “The demand for mobile P2P payments also paves yet another new avenue for banks to strengthen ties with customers. Consumers are clearly asking for quick, secure access to their money.”

Speed and convenience were primary incentives for adopting mobile P2P payment services. However, security concerns remain the leading deterrent, as 63% of consumers said enhanced security would encourage them to use mobile P2P payments. Javelin found that even “tech savvy” consumers, while interested in mobile P2P payments, strongly fear the loss of personal information (62%) and fraudulent transfers (52%).

Javelin found that 25-44 year-olds and consumers earning more than $100,000 per year are the most willing to use mobile P2P payments. Interestingly, 39% of 45-55 year-olds indicated that anytime, anywhere access to their money was important, but only a fraction of the group (14%) said they are likely to use mobile P2P payments. The same is true for 55 to 64 year-olds, who care more about sending and receiving money quickly than any other age group (39%), but only 11% are likely to use mobile P2P payments. This group’s cautious behavior may be explained by a lack of familiarity or trust in mobile devices and technology. Among 18-23 year old consumers, 23% indicated that avoiding cash and checks was their primary motivation to adopt the service.

“Perceived security threats are definitely the sticking point for mobile P2P payments right now,” said Mary Monahan, partner and senior analyst at Javelin Strategy & Research. “Once the safety and access hurdles are cleared, we expect this technology will become part of everyday life.”

The report also outlines two key consumer segments that remain largely untapped – unbanked consumers, those without checking or savings accounts, and consumers who send remittances. 60% of unbanked consumers would be willing to move away from money lenders toward banks to have the ability to conduct mobile P2P payments, which may be explained by an existing comfort with the mobile channel. The 38 million migrants currently living in the US represent another key market for mobile P2P payment services. According to the World Bank, international migrant remittances stand at more than $232 billion, with $167 billion flowing to developing countries.

Key Findings of the Mobile Person-to-Person Report:

• Consumers must have a strong sense of security with the mobile channel in order to adopt additional mobile banking services like mobile P2P payments. Through consumer education, financial institutions must provide convincing evidence of the safety and security of customer across the mobile channel.
• Mobile bankers and “tech savvy” consumers will be early adopters of mobile P2P payments. These target consumers will be critical in driving overall adoption because recipients of their transfers will also be pulled into the market.
• Mobile P2P payments could pave the way to mobile merchant payments and mobile shopping. With advances in mobile browser technology on the horizon through open source platforms like Google Android and Apple iPhone SDK, mobile devices could eventually replace the use of credit or debit cards as a purchasing staple.

About this study

The Javelin Strategy & Research report, "Mobile Person-to-Person Payments and Transfers: Security and Timing Are Everything," is based on an online survey of 2,192 consumers, a survey of 26 executives from the financial industry,and ten interviews of executives in the payments industry.

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