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Feb 08, 2017 @ 09:02 by Lena Traninger

How peer-to-peer messenger payments are entering the global market

While many key features of the future payment landscape are still unknown, drastic changes are ahead. Next to classic financial intermediaries such as banks and payment providers, social networks are the most important players claiming their stake in peer-to-peer (p2p) payments.

Peer-to-peer messenger payments

Asian payment companies are regularly cited as a prime example for peer to peer payments. The adoption rate is fast. Alipay, one of China’s most popular wallets, recorded billions of transactions in 2016. With the power of Alibaba behind it, Alipay is surpassing its rival WeChat, which has more than 800 million users. Today, p2p transfers are the only form of payment where WeChat still dominates. Together, Alipay and WeChat comprise 90% of the Chinese social payment market. The German payment service provider Payone recently expanded its payment options to include Alipay – whether that will lead to a faster adoption of Alipay’s p2p offers is yet to be seen.

Established platforms are in the lead

With just 6.5% of the Chinese volume, the U.S. e-payment market is still lagging behind. PayPal is one of the longest standing members in the game, with the popular social payment Venmo and a recently launched payment functionality in Siri.  Their latest venture is a payment bot for Slack, which can handle transactions of up to 10.000 USD. Due to their massive user base, established platforms may be better poised to become the dominant p2p payment providers than small startups. In addition, they are better able to cover the high costs associated with regulations, compliance and transaction monitoring and management systems. Hence, it is established companies that are most successful in targeting the market.

User experience is the key to success

To drive acceptance, payment solutions have to provide an outstanding user experience. And what is more seamless than planning a dinner with a friend via chat and then sending your part of the bill at the end of the evening. Facebook has recently integrated a payment functionality into its chatbots. Integrated in the chatbot ecosystem, payments are the next step towards providing a complete and individualized purchasing experience. For now, all testing of the Beta version is restricted to the U.S. However, a newly acquired e-money licence indicates Facebook will be rolling out its payment services in Europe soon. Here, Facebook payments will be able to provide added value through features such as currency conversions. Other messengers such as Telegram are rumoured to be working on payment integrations into its chatbot system in Russia. Snapchat partnered up with Square Cash to provide in-app payments, the cooperation is expected to boost trust in the new feature and is only available in the U.S until now.

The European market is still lagging behind

Many reasons are cited why Europe is still not as attractive as other markets, such as low acceptance level of e-payments, higher governmental regulations or stronger focus on data security. While Europe appears to lag behind concerning all forms of p2p e-payments, the Nordics have higher affinity for cash-free transactions. In fact, more than 50% of the Swedish population use the payment app Swish. The app started out as a p2p system and has since expanded its services to corporates. Similarly, Danske Bank’s MobilePay  and the Norwegian Vipps have 2.9 million and 1.5 million active users respectively. Key to the apps’ success are their independence of their corresponding banking system and the focus on easy transactions. For continental users, the closest service is, which provides each user with their own PayPal link for sending and receiving money, as well as N26’s payment button in Siri.

What to expect in the future?

In essence, the core p2p payment providers across the globe are still largely undecided, except for China, which is far ahead due to the offers of Alibaba and WeChat. These already indicate that the answer lies with chat platforms, which can draw on their pre-existing user base and provide a seamless interaction. The chatbot systems of Facebook and Telegram are well suited to adopt payment as a further functionality. However, Europe is not used as a playground for these tools and we may well have to wait until an established foreign company decides to tackle this market.

Lena Traninger is a Digital Analyst at dgroup. She has worked for various start-ups and has a strong focus on FinTech and chatbots.

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