Mobile, real-time, anytime, anywhere — the benefits, convenience and use cases of P2P make it easy to understand why P2P usage continues to grow (and has turned a major P2P player’s name into a verb). In fact, Mercator’s North American Payments Insights showed that 77% of consumers have used a P2P service within the past 12 months, up from 57% in 2017.*
But while the growth and popularity of P2P is undeniable, the truth is that not all P2P solutions offer the same benefits or levels of protections for their users. While “Venmo me” may be widely spoken on a daily basis, the fact is that the name-brand power players in the P2P space are not peerless. This provides FIs with a unique opportunity to do what they do best: offer a trusted service to their customers and members.
Taking the Fight to Fraudsters
If there’s one thing fraudsters love, it’s a relatively new technology that is rapidly adopted by a wide array of consumers. This is the perfect ecosystem for a “Wild West” scenario where fraudsters are able to take advantage of the gaps inherent in a new system and exploit them for personal gain. According to Javelin Strategy and Research, nearly 18 million Americans were defrauded through scams involving digital wallets and person-to-person payment apps in 2020.
Compounding this issue is that the matter of liability continues to be debated, making it difficult for consumers to retrieve their money once it is gone. According to Mercator’s U.S. 2022 Person-to-Person (P2P) Payments Market Update, “Providers in the P2P space have been adamant that, because a P2P transaction is authorized by the payer, they do not qualify as protected transactions under Regulation E (consumer protection for usage of electronic fund transfers).” Because of this, P2P providers rank near the bottom of fraud resolution satisfaction scores.
Paymentus invests considerable resources to ensure that the data entrusted to us is safeguarded at all times. As an industry leader, compliance and information security activities are present in everything we do. Paymentus continually evaluates and updates our standards and solutions to meet the latest technology, market and regulatory demands.
The biggest difference maker, however, is within the Paymentus P2P solution itself. This experience is purpose-built to counteract fraud before it can even take place. The process is simple:
- When initiating a transfer, the payer will create a verification challenge (i.e., question) that the recipient must answer
- The payer will share this information with the payee, who will then be asked to input the answer before funds are transferred
- Once the recipient has answered the question correctly, funds are then sent to the appropriate account
This verification challenge is unique within the market and adds an extra layer of protection to ensure that both the sender and recipient are aware of the transfer and will not be surprised by scammers.
Another key security feature offered by the Paymentus P2P solution is our multi-factor authentication requirement when sending to new recipients. When a hacker gains control of an account, the first thing they do is send money to an account that they have set up. By requiring multi-factor authentication when sending to new recipients, hackers are unable to send stolen funds to their accounts because they are unable to prove that the account is theirs.
Additionally, Paymentus offers a host of back-end fraud mitigation processes to prevent fraudulent activity. These options are configurable for FIs and include:
- Pre-set transfer limits based on user accounts and profiles
- Segmentation based on customer profiles that determine their sending limits
- Maximum payment amounts for single payments as well as daily limits
- New member limits
- System locks when email/phone numbers have been changed within a certain set number of days
- System locks when a sender creates a transfer to a known fraudulent name, email or phone number
This consolidation of front- and back-end mitigation procedures enables FIs to offer their members and customers a best-in-class P2P solution that minimizes fraud, protects against scams and won’t make the headlines.
Fund Transfers Without Walls
While it may seem like today’s top P2P apps allow users to send funds to anyone, the truth is that some limit them to sending funds only to users who are on that particular P2P network. Should they want to pay a landscaper or dog walker outside of the network, they’re back to either needing checks or cash.
The Paymentus offering eliminates this by necessitating the recipient only have a bank account. The transfer can be made by just using a mobile number and/or email address. The receiver receives a message relaying that they have been sent funds. They are then prompted to enter their mobile number and answer the security question/verification challenge set up by the payer. Once answered, the recipient can then select whether to enter a bank account or debit card number to receive their funds.
The entire transaction takes place within the FI’s branded experience, but opens the door to transfers to any location.
Ultimately, when it comes down to their money, consumers will work with those they trust. While brand name P2P apps make the headlines, there’s nothing that can replace the inherent trust established by an FI and its customer base.
With Paymentus’ P2P offering, there are no third-party apps to download or use. Funds are moved into and out of your customers’ banking accounts, which means that they are FDIC insured and interest bearing, unlike P2P funds held in other apps.
Trust also comes in the form of security. Paymentus P2P offers a proprietary, proactive fraud monitoring system to keep your institution and its customers safe. This means that before a transaction is executed, it automatically goes through a series of fraud and send limit checks to ensure a transaction is legitimate and within the approved parameters set by the FI. Along with multi-factor authentication, challenge questions, segmentation and the like, it’s simply a safer way to allow your customers to send funds.
Plus, your brand is represented throughout the experience, instilling confidence within the transaction. This confidence also extends to the FI, who can rely on a trusted provider of banking technology and not an app that will necessitate a potentially complex integration.
When it comes to P2P, it’s easy to get lost in the brand names. In the end, however, the most important thing to consider is how your P2P solution can improve the lives of your customers and offer them the peace of mind that their funds are safe and their transactions simple. Deliver on this and you’ll foster customer relationships that are both deeper and longer lasting.
For more information on Paymentus’ P2P offering, visit Paymentus.com/banking-fintech/p2p.