Thousands of U.S. consumers have reported fraud and scams leveraging peer-to-peer apps over the last few years, with Early Warning Services' bank-owned app Zelle recently drawing
While local and national news outlets are rife with reports of
About 90% of consumers J.D. Power surveyed early this year said they are unlikely to abandon the P2P app they use most frequently, with just 8% considering a switch in the next year, according to a J.D. Power report analyzing responses from 5,727 consumers in a survey fielded in January and February of 2024.
The most common reason customers listed for switching away from the P2P app they use most often is to join the same platform as their friends and family (39%), followed by concerns about security (28%) and lackluster customer service (19%), according to J.D. Power.
PayPal, Cash App and Venmo are the most frequently used P2P apps, according to J.D. Power data, but consumers are also slightly more likely to defect from some of those services, said Sean Gelles, senior director of payments intelligence at the research firm.
For example, among all survey respondents who said they had used a P2P app within the last 90 days, PayPal was ranked as the most frequently used service, followed by Cash App at 41%, Venmo at 38%, Zelle at 31%, Apple Pay Cash at 14% and Google Pay at 10%, according to J.D. Power.
Despite generally high levels of customer retention among P2P apps, 10% of consumers using Apple Pay Cash, Cash App and Google Pay said they might switch P2P services in the next year.
On average, about 8% of customers using Zelle through their bank said they were likely to switch to another P2P service, Gelles said.
"Consumers using Zelle through their bank tended to report the highest overall customer satisfaction," he said, noting that ease of access to funds is one reason consumers tend to stick with their existing P2P service.
"I think the tightening economy, plus the growing demand from workers to get paid in real time [through earned wage access apps] favors consumers using P2P apps that deliver funds instantly. A lot of people can't wait even a day or two for that money," Gelles said.
Because Zelle is offered by financial institutions and funds move in real time, the platform absorbs much of the blame for P2P fraud, but criminals are actually leveraging multiple apps and payment rails, said David Mattei, a strategic advisor at Datos Insights who specializes in financial services fraud and anti-money-laundering.
"Fraudsters have very good knowledge of human psychology, which they use to exploit consumers in scams that target not only Zelle and other P2P apps, but also real-time payments, ACH, wire transfers and other payment channels. It's going to take a collaborative effort among many industry participants to address this [fraud]," Mattei said.
