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Merchants respond to Consumer Demand by Offering P2P Payments

New TSG and ETA research looks at how usage has spilled over to small businesses, gig workers, and side hustles.

82% of small businesses reported accepting at least one digital P2P option at their business. That’s according to new research conducted by The Strawhecker Group (TSG) and the Electronic Transactions Association (ETA). Over 500 U.S. small businesses were surveyed to better understand trends and how usage of peer-to-peer (P2P) payments has spilled over to merchants, gig workers, and side hustles.

P2P Payments: A Disruption to Plastic?

Check out our infographic for key findings and learn why small businesses are turning to P2P, which options are most widely accepted, and what the future holds.

Digital Peer-to-Peer (P2P) payments P2P, or peer-to-peer payments, are mobile-based methods, like Venmo or Zelle. Traditionally allowing users to pay other people without using methods like cash, check, or card. Options like this have been available to consumers since the launch of PayPal in 1998, but the payment option has grown over time. Many consumers are now interested in utilizing P2P options to pay merchants as well, and some P2P payment methods can now be funded directly by bank accounts.

“More and more – especially among newer establishments and gig workers – merchants are responding to consumer demand by allowing them to pay through digital P2P options,” said Jared Drieling, Senior Director of Market Intelligence and Insights at TSG.

Merchants in the study provided reasons for turning to P2P options such as ease of use. Other reasons include a desire to offer greater variety to their customers in terms of payment choice, and as a way to appeal to younger consumers. Others felt they were too small to make comparatively costly investments in additional payment processing capabilities.

Overview Findings

Beyond just acceptance of payments through P2P apps, some merchants were slow to explore more typical methods of acceptance. Only 35% of merchants reported taking credit or debit card payments using a traditional merchant services providers. Therefore, many were choosing to leave a balance in their P2P business accounts (44%), rather than transferring funds received into a bank account.

Despite strong usage of P2P digital options, the payment mechanism was not without caveats. A number of merchants experienced issues, including unexplained holds. Others experienced delayed access to funds, occasional high fees, glitches through different apps, and significant fraud and chargebacks. These reasons may explain why 54% of merchants who don’t accept P2P transactions were uninterested in them in the future.

Even so, 93% of merchants who were already accepting P2P options noted they planned to continue. The future of P2P digital payments looks bright.

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