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Peer-to-Peer Payment Services

In class, we learned about direct and indirect benefits a consumer can receive from using a product. An indirect benefit of following a crowd is based on the premise that a consumer can infer that a product is good quality because everyone else is using the product. In lecture, one example was that a person may decide to use a new social media app simply because all of that person’s friends are also using that app, and thus believing that the app must be worth using if all his friends are using it. A direct benefit of following a crowd is received when a consumer gains an advantage to using a product when a crowd is using the product too. In terms of our previous example, a person may only use the social media app if his friends are also using it; otherwise, there is no point in using the social media app if there is no one to communicate with on it.

One of the biggest trends is peer-to-peer payment services. Direct and indirect benefits can be seen clearly in peer-to-peer payment apps like Venmo. In my own previous experience, at the start of last year, a friend asked to pay me back using Venmo, which at the time was beginning to gain popularity. I had never heard of the app before, so I declined  installing it from the App store, because I didn’t think I would get much use out of it if none of my friends were using it. However, in the proceeding weeks, I learned of more and more people using Venom as it became more popular. The next time that friend asked to split a bill using Venmo, I decided to download and use it because I had observed enough people using the app that I believed it would be worth it to use the payment service. The direct benefit here was that I knew I would be using the app enough since many of my friends were using it as well.

Since Venmo has established success in this field, many name-brand companies such as Google and Apple have been trying to break into the market as well to compete with Venmo for the millennial consumers. In recent news, Apple has been rumored to develop a peer-to-peer payment service on iPhones to help gain popularity with Apple Pay and Wallet, both of which are newer features that have yet to gain much traction.

I believe that should Apply create a user-friendly peer-to-peer feature on iPhones, that it would become extremely popular. Because peer-to-peer services have already been successfully introduced to consumers, and because iPhones are so common, the crowd for an iOS peer-to-peer product already exists. Venmo had a harder time passing its tipping point of popularity because it was the first peer-to-peer app to become extremely popular; for many consumers, including me, it was the first exposure to peer-to-peer payments. It took me a few weeks in order to become convinced of its popularity before installing Venmo. However, for Apple, most of the grunt work has already been done. Peer-to-peer payment products are already widely accepted. If Apple rolled out a new peer-to-peer payment iOS app, I would see no reason why not to use it and convince my friends to use it too, the next time we need to split a bill at a restaurant. Especially since the app would be a built-in feature like Apply Pay and Wallet, it would be very easy to incorporate the new technology into daily life.


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