It is safe to say that most of us have at least heard of payment apps such as PayPal and Venmo. Odds are that you have probably also used one of them yourself, particularly if you fall into a younger demographic.
What exactly are these apps, how do they work and why is a certain segment of our society, i.e., older people, more wary of these funds transfer options?
Peer to peer payments defined
Whether people are using Venmo or Zelle for business or splitting the cost after a dinner out with friends, Peer-to-peer (P2P) payments are ubiquitous these days. P2P payments eliminate the need for middlemen like credit card companies or banks.
Instead of relying on these institutions, P2P systems use digital platforms to transfer funds from one person or business to another.
This requires that both entities register with a P2P provider such as PayPal or Apple Pay, linking their bank account at that time. Once this introductory step is accomplished, funds can be exchanged with any other party who is also signed up on the provider’s digital platform.
Security safeguards with P2P payments
Just as they have done for businesses that accept credit cards, P2P payment service providers have taken steps to minimize security and data breach risks to protect their customers. To that end, they have implemented measures such as biometric and two-factor authentication, encryption, tokenization and activity alerts.
These precautions combine to greatly reduce the chances that a person’s credit card details or identity information will be stolen by cyber thieves.
Issues with adoption of P2P payment apps
On the surface, a study conducted by the American Association of Retired Persons (AARP) seems to offer good news when it comes to adoption of P2P apps by more mature members of the population. Over 57 percent of the study participants aged 50 and above had used P2P apps such as PayPal and Zelle.
However, the research revealed that only 15 percent of those same people use these platforms on a regular basis.
By contrast, the same study (“Peer-to-Peer Payment Practices and Associated Risks”) suggested that adoption rates of this technology are much higher for younger people. 84 percent of participants aged 18 to 49, for instance, indicated that they used P2P digital apps, with 28 percent doing so frequently.
Those older Americans who have embraced P2P have done so because these methods help them to accomplish specific tasks. 40 percent of respondents 50 and over use P2P options to send funds to family members.
26 percent of older participants transferred money to friends with P2P. And 45 percent of the older study participants paid for purchases from online bidding sites such as eBay using P2P, with PayPal being the most popular of the peer-to-peer payment options.
However in spite of the safety precautions put in place by a seller’s merchant service provider and by the P2P platforms, there are still chinks in the data safety armor that bad actors can exploit.
Across all age groups, over half of the respondents in the AARP study (53 percent) stated that they had made P2P payments to people they did not know. 52 percent of those same men and women were unaware that it would be difficult if not impossible to get a refund for a P2P payment that was fraudulent or made in error.
Wariness of technology
When older Americans resist the convenience and relative safety of P2P apps, one potential cause may be their discomfort with the internet, smartphones and other relatively recent innovations.
A 2015 Pew Research Center survey found that only 26 percent of participants aged 65 and older felt very confident in their ability to use smartphones and other electronic devices to perform online tasks.
Another study by Pew found that a larger proportion of adults over 65 were considered to be “digitally unprepared.” Additionally, a significant portion of elders (28 percent of U.S. adults aged 65 and over) reported that they have health problems and other challenges that keep them from participating fully in school, work, domestic tasks, etc.
The future of digital adoption among seniors
Nearly a decade has passed since the Pew research study cited above was published. More current research may reveal that attitudes have evolved with time.
In addition, it should be noted that once seniors do break through the barriers that have kept them from going online and using innovations such as P2P payments, they tend to embrace these technologies.
Of those who use the internet, about 75 percent of these older adults do so once a day or more often. 76 percent of the seniors who own smartphones go online once a day or even more frequently.
How to encourage seniors to pay using P2P
You do not necessarily need to accept credit cards to get paid by customers or friends. Especially if you only want to take funds from clients or social contacts on an occasional basis, you can leverage peer-to-peer digital platforms to get the job done.
Regardless of the age or technological expertise of your potential payees, you can make great strides in reducing their reluctance to use P2P solutions by making transparency a priority. Take time to explain, in person or on your website, the full range of security precautions that have been put in place to protect these transactions from end to end.
Create channels through which people can contact you with questions and concerns, and be sure that you clearly specify your returns and exchanges policy if you are selling products and services.
P2P platforms are rapidly becoming the first choice for many U.S. customers who want to complete their purchases or transfer funds to individuals.
Although seniors may still be more wary than their younger counterparts to follow this trend, providing them with clear instructions and reassurances about digital security may help them to overcome their reluctance.
