The American economy is the largest in the world, but, like many others, the past few years have seen a departure from the use of cash.
The recent introduction of peer-to-peer payment apps has abetted this move to a digital economy. Peer-to-peer payment apps, sometimes abbreviated as P2P payment apps, allow users to transfer money instantly from their bank accounts into the accounts of those to whom they owe money.
These apps are growing in popularity among young people, particularly urban college students, as a way of paying back friends for anything from food to car rides. There are numerous P2P payment apps available, but just a handful dominate the market.
The P2P payment app Zelle, just released in 2017, has skyrocketed to popularity in the two years since its rollout. Zelle is not as popular among young people but finds it advantage in corporations: it is supported by major US banks that have it pre-installed on their apps, according to Mobile Marketer.
Other P2P payment apps may struggle to compete with Zelle in the corporate world but find themselves increasingly popular by young people and college students. Venmo, founded in 2009 by payment company PayPal, and Cash App, released in 2013 and owned by Square Cash, are two examples. While less widely used in the world of big banks, Venmo and Cash App are two of the primary P2P apps used among college students, according to The Philadelphia Inquirer.
This strong support for Venmo and Cash App over other P2P payment apps can be seen in a Twitter poll taken of college students in March that received 132 responses. Of the respondents, 82 percent said they exclusively use Venmo, three percent exclusively use Cash App, 12 percent use a combination of the two, and three percent said they use a different app entirely.
A more specific Twitter poll taken of ten American University students showed that they use other apps in congruency with Venmo more than college students as a whole. While 50 percent, still a plurality, said they use Venmo exclusively, 30 percent said they use Venmo and Cash App, 10 percent use only Cash App, and ten percent use another app entirely.
But users of P2P payment apps are not reflective of the whole story. In fact, many Americans at present cannot even use a P2P payment app. This is because these Americans are unbanked, meaning they are not served by a bank or similar financial institution.
While it may seem hard to believe to some Americans that in the 21st century, a person can live in the United States without a bank account, a 2017 study by the Federal Deposit Insurance Corporation (FDIC) found that 6.5 percent of Americans were unbanked.
In addition to this, the same study found that 18.7 percent of Americans were underbanked, meaning they do not have full use of banking facilities.
The number of unbanked and underbanked Americans has been on a steady decline for years, a positive development for the formerly un- and underbanked who can now say they have the ability to build a credit score, purchase goods online, and do a multitude of other things that the un- and underbanked cannot do.
But while the number of un- and underbanked Americans have been on the decline, 6.5 percent of Americans still adds up to 14.1 million adults without a bank account, according to US News.
Additionally, the number of unbanked and underbanked Americans is higher in African American, Latino, poor, and disabled communities. While the American population as a whole has 6.5 percent unbanked members, 16.9 percent of African Americans and 14 percent of Latinos are unbanked, both over twice as high as the general population.
This disproportionate effect can also be seen in Americans who have received less education. Among Americans without a high school diploma, 22.4 percent are unbanked. Similarly, among disabled Americans between the age of 25 to 64, 18.1 percent are unbanked, according to the FDIC study.
No major P2P payment apps have made their services available to un- and underbanked Americans.
Cash App has expressed interest in allowing currently unbanked Americans to access the app and use it as their own de facto bank account, according to the technology news website Recode.
Square Cash’s Chief Financial Officer Sarah Friar discussed the idea publicly at Recode’s Code Commerce 2018 event.
“Anything you do today with a bank account, you should look to the Cash App to begin to emulate more and more of that,” Friar said.
Cash App has yet to roll out any initiative.
It remains to be seen what the future will hold for unbanked an underbanked Americans with the rising popularity of P2P payment apps.
While the introduction of P2P payment apps makes life easier for college students and other young people looking for a quick and easy way to pay back their friends, a shift to relying on these apps leaves behind the remaining millions of unbanked Americans.
Currently, none of the major P2P payment apps have sought to fill this gap in their consumer market by offering any type of feature for unbanked Americans to use the applications.
Neither Venmo nor Cash App responded to request for comment regarding their policies about underbanked Americans.
Comentários