The rise of the payment app: ‘I hardly use cash any more’.
Using a payment app to pay your friends directly or split a restaurant bill has become increasingly popular among younger generations in particular. But are they safe?
Nikki Hesford, 32, is a convert to person-to-person payment (P2P) apps, using PayPal to pay for services and Venmo to pay back friends.
“The only time in the last year I’ve drawn out cash is for the school fete cake stall and to pay my manicurist,” says Ms Hesford, who runs her own marketing support company for small businesses.
“If I go for a meal with friends I can’t be bothered messing about with two, three or four cards,” she says.
“One person will pay on a card and the others will transfer through an app. It takes seconds rather than minutes fussing around with who owes what.”
Such P2P apps, like PayPal-owned Venmo, Zelle, Apple Pay, Facebook Messenger, WeChat Pay, and Square Cash, let you pay someone in seconds because they’re hooked up to your bank account, credit card or debit card.
They are proving popular with young people wanting a convenient, cash-free way to pay friends back for coffees, takeaways or cocktails, but are also being used for larger payments.
And they’re growing fast.
Zelle, one of the most popular payment apps in the US backed by 150 banks, launched in June 2017, but has already processed more than 320 million transactions valued at $94bn (£72bn).
A recent report by Zion market research suggested that the global mobile-wallet market in general is expected to top $3bn by 2022, up from nearly $600m in 2016.
Neeraj Vig, 33, says using a P2P payment app is more convenient and cuts out the awkwardness of having to remind his flatmate every month to pay the rent.
“Instead of chasing my flatmate when the bills come in I’ll request the money through an app called Billbutler,” he says. “Once he’s transferred it to me I’ll then pay the bill straight away.”
Such apps, along with contactless payment cards and smartphones, are rapidly making cash redundant.
“You no longer need to waste time trying to find a cash machine to settle a debt, or fiddling around with sort codes and lengthy bank account numbers to transfer money,” explains Alison Sagar, PayPal UK’s head of consumer and marketing director.