AJVFintech

Why is peer-to-peer payments the most underrated innovation in Fintech?

P2P payment methods (peer-to-peer) are often overlooked in the FinTech industry. Why is this the case? First and foremost, P2P allows individuals to directly exchange financial resources, bypassing intermediaries such as banks. This leads to significant fee reductions and simplifies the process of financial transactions.

Successful cases:

  • PayPal;
  • Snapchat;
  • Cash App;
  • Binance;

Traditional financial institutions, like banks, act as intermediaries in financial transactions and charge fees for their services. However, with the development of P2P technologies, people can exchange money directly without intermediaries. This results in lower fees and allows users to keep a larger portion of their financial resources.

Furthermore, P2P opens up access to high-risk payments for businesses, which is why it has been displacing traditional card equivalents in areas like gambling, forex, and especially in the crypto industry in recent years. It offers an alternative payment method where regulation has minimal influence since liquidity is organized by the community.

So what opportunities does P2P provide?

  • Acceptance and disbursement of funds without approval from acquirers and payment systems;
  • No mandatory settlement to a bank account, using cryptocurrency;
  • No need for PCI DSS confirmation;

However, despite all the advantages, P2P technologies are still underappreciated and relatively unknown. Many people prefer to use traditional banking services without realizing the potential benefits that P2P can offer. Lack of information and awareness is one of the reasons why P2P technologies have not gained widespread recognition.

Perhaps with greater awareness and education, P2P will become a more widely accepted and utilized tool in FinTech. Educational programs and information campaigns can help popularize P2P and demonstrate its potential in improving access to financial resources and economic development.

Eventually, innovations not only need to be invented but also go through implementation stages, especially without violating AML legislation. The ideal outcome would be the implementation of a settlement system alternative to payment monopolies like Visa and Mastercard at the national level. The best examples are ACH in the United States, Open Banking in the EU, UPI in India, and SBP in Russia.

Sincerely, AJV

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