Mercator Blog

Low-Cost P2P Networks Threaten to Disrupt Business-to-Business Payment Model
Date: March 12, 2014
Research Team
Call it what you want—disruption, displacement, disenfranchisement. The fact is that the emerging person-to-person or peer-to-peer (P2P) mobile payment solutions are shaping the way in which consumers pay one another, especially members of the Millennial generation. Growing adoption of these payment solutions and the attractive fee structures they offer are bound to influence buyers and suppliers to look for similarly efficient and cost-effective ways to pay one another for business. The trend in adoption of P2P payments by consumers continues, as does the increasing breadth of applications available in the marketplace. The applications in the mix gaining adoption are being offered by both financial technology firms and newly created businesses.

Adoption of mobile P2P technologies by consumers influences how they view their business services applications. Consumers are becoming accustomed to engaging in financial transactions using applications that are intuitive, efficient, provide access to data in real time, and have an updated look and feel to them. In the general public, the expectation has been growing that financial services will match the innovative pace of consumer applications. Mercator Advisory Group anticipates that these expectations will spill over to pricing. People are likely to expect pricing structures to be reduced in fundamental payment transactions for businesses as they have been for consumer applications with emerging mobile payment technologies supporting P2P payments.

If banks don’t innovate and get the costs for B2B payments down, more and more businesses are likely to initiate a product shift from ACH and commercial card to P2P-like applications. To stay in the game, companies with legacy systems need to become versed in the new technologies providing financial services, learn how their customers are using those new technologies, and then form a strategy to transition their payment products and services to a 2.0 approach to keep their customers.

These concepts are explored further in Mercator’s recently released Research Note titled Emerging Low-Cost and No-Cost Online Payments’ Impact on Traditional B2B Fee Structures, by Amy Hoke, Director, Commercial and Enterprise Payments Advisory Service.