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PayPal One Touch, the firm’s single-click checkout solution, remains PayPal’s most rapidly adopted product in the company’s history, according to a new company blog post.
The offering, which allows users to bypass account and payment information entry, now counts over 50 million global users and 5 million merchant partners, including 75% of the top 100 US retailers. For context, that means that about a quarter of PayPal’s 200 million customers are now One Touch users, though engagement and usage statistics aren’t available.
One Touch seems to be beating its goals, particularly on the consumer end. At the end of Q2 2016, PayPal counted 25 million One Touch users. And the firm noted in September that it expected 36 million users by the end of 2016 — a figure that it likely exceeded, based on the current totals. In terms of merchants, the 5 million total has remained relatively consistent, but is still in line with PayPal’s overall aims.
It’s likely that this is partly due to trends across the industry reflected in PayPal’s own performance.
- E- and m-commerce are rising, which creates friction that payments firms have the opportunity to solve. BI Intelligence expects US e-commerce to hit $631 billion in 2020, with 45% via mobile, up from $341 billion and 19% in 2015. Those gains are reflected in PayPal’s own business, which saw vast mobile increases in 2016, particularly during the holiday season. But buying on mobile in particular tends to have low conversion rates, thanks to friction associated with small screens and slower connections, which could make it complicated for payments firms and retailers in the space.
- One Touch helps solve these pain points, so it’s logical that adoption is rising. Users are flocking to checkout expediters and buy buttons as a means of resolving this tension, particularly as mobile commerce rises, so it’s natural that PayPal is seeing growth here, especially during the busy holiday shopping season. In addition, the firm has made it easier to sign up for One Touch, which likely also helped accelerate growth rate.
This matters for the success of PayPal’s longer-term strategy. PayPal’s push to become a constant presence in users’ financial lives has led it to pursue new segments, like bill pay through the TIO Networks acquisition. But growth in its traditional business products, or those related to them, indicates that it remains top-of-mind and top-of-wallet for many consumers, which will be important as it works to onboard those users into its new offerings down the line.
Peer-to-peer (P2P) payments, defined as informal payments made from one person to another, have long been a prominent feature of the payments industry.
That’s because individuals transfer funds to each other on a regular basis, whether it's to make a recurring payment, reimburse a friend, or split a dinner bill.
Cash and checks have historically dominated the P2P ecosystem, and they’re still a popular tool. But as smartphones become a primary computing device, top digital platforms, like Venmo and Google Wallet, have enabled customers to turn away from cash and make those payments digitally with ease. Over the next few years, though overall P2P spend will remain constant, a shift to mobile payments across the board and increased spending power from the digital-savvy younger generation will cause the mobile P2P industry to skyrocket.
That poses a problem for firms providing these services, though. Historically, most of these players have taken on mobile P2P at a loss because it’s a low-friction way to onboard users and won’t catch on unless it’s free, or largely free, to consumers. But as it becomes more popular and starts to eat into these firms’ traditional streams of revenue, finding ways to monetize is increasingly important. That could mean moving P2P functionality into more profitable environments, leveraging existing networks of friends to encourage spending, or offering value-added services at a nominal fee.
Jaime Toplin, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile P2P payments that examines what’s driving this shift to mobile P2P and explains why companies need to find a way to capitalize on it quickly. It discusses how firms can use the tools they have to gain in the P2P space, details several cases, and evaluates which strategies might be the most effective in monetizing these platforms.
Here are some key takeaways from the report:
- Consumers still want mobile P2P services, and they’re turning to them. Individuals pay their peers on a regular basis, and as smartphones are increasingly used as computing devices, these consumers look to such services for fast and easy ways to pay.
- Monetizing P2P is more important than ever. Initially, P2P was a valuable onboarding tool for companies, and when it was still a small segment, taking it on at little value or a loss didn’t have major implications. But as volume grows and user bases scale fast, finding ways to monetize quickly should be a priority for firms looking to stay ahead.
- New technology could put some apps ahead of their peers. P2P continues to rely on networks, especially for informal, social transactions. But rather than having a large network, it’s becoming important for firms to understand their user bases and the networks within them. This means that chat apps, and leveraging bot and AI technology, may offer a distinct advantage.
In full, the report:
- Forecasts the growth of the P2P market, and what portion of that will come from mobile channels, through 2021.
- Explains the factors driving that growth and details why it will come from increased usage, not increased spend per user.
- Evaluates why mobile P2P isn’t profitable for companies, and details several cases of attempts to monetize.
- Assesses which of these strategies could be most successful, and what companies need to leverage to succeed in the space.
- Provides context from other markets to explain shifting trends.
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