The peer-to-peer payment market is massive and growing quickly, though that growth is exacerbating friction that arises when consumers use two different services.
Visa is attempting to solve this problem by partnering with other payment companies to offer a bridge that directly connects P2P apps.
Called Visa+, the service will start testing later this year with PayPal and Venmo. The new Visa product comes as the addressable P2P market expands, creating an opportunity to manage transactions that involve two different transfer apps as well as stack new products on top of P2P rails.
PayPal owns Venmo, but transfers between the two apps are not direct. There are
"Visa+ will be helpful in that it provides the capability to move money instantly, this is something Venmo and PayPal cannot do on their own," said Sophia Gonzalez, debit and alternative products payment analyst at Javelin Strategy & Research. PayPal did not provide comment by deadline.
Visa+ will not require users to have a Visa card. Consumers will set up a personalized payment address linked to their Venmo or PayPal account. People using either app will be able to receive or send payments between the platforms. Participating payment apps will pay for sending and receiving Visa+ transactions, with the participating wallet or app determining fees.
"It reduces the need for consumers to go back and forth across multiple payment apps," said Vikram Modi, head of Visa+. Instead, the payment address, called a Visa+ payname, links to to their digital wallet, and consumers can receive and send payments across all other participating wallets.
On the B2C front, Visa+ will become another option for digital payouts for content creators, marketplaces, gig workers, and others, Modi said.
P2P transfers generally have the easiest user experience when both parties use the same app. That is often not the case given the
Visa has taken several steps to address friction for P2P transfers that involve different payment companies and thus cannot be done directly. The card brand has been building its
While Visa+ utilizes the same push payments technology as Visa Direct to simplify deployment for participating clients, it provides custom operating rules and tailored pricing for cross-platform interoperability, Modi said. "Visa Direct enables P2P payments within payment apps and digital payouts to cards, accounts and wallets, and covers domestic and international money movement for individuals and small businesses," he said.
Visa+ could add to that momentum, making the card company a "clearinghouse" between mobile wallets and P2P apps, according to Richard Crone, a payments consultant, adding Visa+ will compete with ACH and demand deposit accounts market. It will also add a new distribution endpoint with mobile wallets and P2P apps.
"As the system of record for pre-authenticated identifiers, Visa+ facilitates transfers between payment apps, a new market," Crone said.
Visa+'s other partners, including Western Union and earned wage access provider DailyPay, will broaden use cases, such as payroll. "For current gig workers, they may be required to have certain accounts to cash their instant payment checks into," Gonzalez said.
In a release, DailyPay said Visa+ will enable earned wages to be available "the moment they earn it." Earned wage access has expanded in popularity as inflation rises and the economy cools. EWA is also popular as an option for contractors or gig economy workers, who can get paid as they work. Adding real-time direct deposit is another potential benefit.
"Consumers have been interested in directly depositing paychecks into Venmo accounts for years," Crone said. " Visa+ makes this possible for employers, payroll processors, fintechs, challenger, and neo-banks to enable direct deposits into participating mobile wallets and P2P apps, starting with PayPal."
Visa+ and other P2P services have a large addressable market that is expanding. The global P2P market is on pace to reach $3.04 billion in 2023, up from $2.62 billion in 2022, according to an aggregation of market data from ReportLinker, which indicates the market should reach $5.6 billion by 2027.
Interoperability between apps has become a major concern among banks, payment processors and merchants. Ninety-six percent of executives say interoperability between digital payment services is "very important," according to The Faster Payments Council, which surveyed 400 banks and payment companies.
Recent research from Visa found
Visa's announcement mentioned mobile wallets as users, but did not mention Apple Pay and Google Pay as potential partners. Visa also did not mention other bank-supported P2P networks as partners.
"Given Visa's sheer size and number of transactions they process, I don't think the importance is placed upon Visa to expand its reach; rather, payment providers need to place an importance on partnering with Visa," Gonzalez said. "Visa+ is providing the infrastructure to process real-time payments, and those who cannot process real-time payments will be left in the dust. Visa will naturally form a bridge, given its presence."
Visa+'s development comes as Early Warning, which manages the bank-led Zelle P2P network, develops a
Visa+ is is complementary to P2P payment apps, Modi said, adding that Zelle and Chuck are not partners. "Visa+'s primary goal is to enable interoperability between different payment apps in a secure and scalable manner," Modi said.
