#TwitterPoll: Do you pay people using an app?

Do you pay people using an app?

Recently, we asked Twitter users if they pay people using an app.

The results are in. With 536 votes, only 24% of respondents claimed to pay others using an app. Broken down, 16% pay friends, 6% pay family members, and 2% pay employees using an app; however, the majority of respondents, 76%, don’t pay using an app at all.

Where only 22% of respondents claimed to pay friends and family using an app, a large majority claimed they don’t use payment apps at all. For P2P (peer-to-peer), that means cash or check take up the majority of payments, as consumers cannot pay one another with credit or debit cards.

But what about B2B (business-to-business) payments? Only 2% of respondents claim they pay employees using an app. Businesses are relying on banks for their payouts, which can be costly, especially when paying contractors and overseas partners.

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With so many digital payment methods available for both business and personal payments, what do cash and checks have that payment apps don’t?

Why this resistance to payment apps?

Cash bias

While it’s common to hear that cash is dying out because of online payments, cash remains the top way to pay in 2019. According to Paysafe’s Lost in Transaction, 2017, 88% of consumers used cash for payments in the month prior to the report. It’s clear that most Americans don’t want to say goodbye to cash. Will payment apps ever fully replace cash?

Many small business owners and CFOs don’t see a problem with cash-dominated business. It’s the way they’ve always done business. They may lack the interest, trust, or knowledge of the available technologies for business transactions.

Security fears

Of course, we’ve all read reports on apps selling personal data to researchers and solicitors, or criminal hacking groups performing sophisticated and targeted cyberattacks.

Venmo is the leading app for payments. But recent criticism calls out the ongoing vulnerability and lack of privacy that Venmo users are subject to, often without realization.

Online payments processors tend to promise convenience and security; however, many of these companies are also startups.

Is it the fear that an up-and-coming business could be malignant, or else that it may be hacked?

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While new and innovative technology and software are exciting, it’s too much to give an emerging payments processor sensitive data and banking information. The benefits of digital payments, whether B2B or B2C, can’t compete with the fear of a possible breach. Consumers and businesses recognize this possibility and refuse to be the guinea pigs for startups still vulnerable to hackers and bugs.

ACH lead business payments in the US

In 2018, businesses in the US preferred using ACH (automated clearing house) payments for payroll and transactions. These businesses are comfortable with the benefits of ACH payments, such as the lack of middlemen, digitization, and assurance against fraud.

Of course, with these benefits, businesses are sacrificing the convenience, timeliness, and transparency that payment apps offer. Additionally, the charges and hassle per transaction are widely downplayed by banks, especially when compared to other very secure digital methods.

A collect of wrinkled US dollar bills

Why businesses need to adapt

When relying on banks for money transfers, businesses sacrifice control, time, and visibility.

And although cash can’t exactly be hacked, it’s not easy to track and has its own insecurities. Especially when your customers and business partners expect digital methods.

Lost in Transaction claims that despite their above findings, 55% of US consumers said they carry less cash than they had the previous year. This majority shift was reported in the UK and Canada as well.

Businesses need to adapt to digital payments options because the world is becoming more mobile and tech-friendly. Consider this, is your payments method costing you customers?

In our digital economy, your payment methods depend on the expectations and preferences of your clients. That includes what’s convenient, affordable, secure, and popular at the time.

Sound familiar?

What blockchain technologies can offer

B2B partnerships that use online payments get the benefits of simpler and more visible transactions.

There are many online payments options available to help small businesses that don’t neglect the other factors listed above. The hard part is finding the right one, that is user-friendly enough to satisfy each party and can be easily integrated into your systems.

Venmo, the leader in P2P payments, is also used by businesses, but not very often. Its parent processor, PayPal, offers solutions for businesses looking to send money. However, their prices are a conflict for many small businesses.

For businesses paying either their business partners, employees, suppliers, etc., Veem’s international network can help, with prices that beat PayPal everytime.

Whatever the superstitions behind payment apps, or blockchain in general, businesses need to consider priorities and competition when reevaluating their payment methods. If your transfers or transactions are costing you or your partners’ money, it’s time to update.

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* This blog provides general information and discussion about global business payments and related subjects. The content provided in this blog ("Content”), should not be construed as and is not intended to constitute financial, legal or tax advice. You should seek the advice of professionals prior to acting upon any information contained in the Content. All Content is provided strictly “as is” and we make no warranty or representation of any kind regarding the Content.