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Insights and Expertise
ChapterTitle

The double-edged underbanked populations, opening up new opportunities
for financial inclusion.
sword of P2P The appeal of P2P payments can’t be denied. Instant,

borderless and often low-cost, these systems simplify
payments personal transactions in ways that were unimaginable a
decade ago. However, the convenience that makes them
so popular also comes with potential drawbacks to keep
in mind.
The risks behind the convenience

The simplicity of P2P payments belies a range of security
vulnerabilities. Fraud and cybercrime are growing
concerns, with many users unaware of the risks associated
with these platforms. A recent survey by LendingTree
revealed that nearly half of consumers (48 percent) are
unfamiliar with the dangers of P2P fraud—a worrying
statistic given how widespread these services have
become.

One of the most common threats is phishing. Fraudsters
frequently impersonate legitimate services or individuals,
tricking users into revealing sensitive information or
transferring funds to fraudulent accounts. These scams
can be highly convincing, with fake notifications that
closely mimic official communications from the payment
By Zaki Farooq provider.
PayFuture
Even without malicious intent, accidental transfers can
pps like PayPal, Venmo and other P2P pay- create significant issues. A small typo or misstep can
ment platforms have fundamentally trans- result in money being sent to the wrong recipient, with
formed how we send money. What was once limited recourse for recovery. Unlike traditional banks,
A the domain of banks and financial institutions many P2P services don’t offer robust protections or the
has been replaced with seamless, direct transactions that ability to reverse transactions, leaving users to shoulder
are fast becoming the norm. Peer-to-peer (P2P) payments the consequences of their mistakes.
have simplified the way individuals transfer funds, offer-
ing unparalleled convenience. Impersonation scams are another growing problem,
particularly in markets where P2P payments are gaining
But beneath the surface, are there risks those businesses— traction. Fraudsters can hijack trusted accounts or create
and consumers—need to address? fake profiles to deceive users, exploiting the trust-based
nature of these platforms.
Understanding P2P payments
At its core, the P2P payments model enables individuals While these risks are primarily consumer-focused, they
to transfer money directly to one another via a digital also have implications for businesses. Fraud and errors
platform. These platforms are designed to be secure, can damage trust, tarnish reputations and lead to financial
instant and easy to use, bypassing the need for traditional losses, making it essential for businesses to approach P2P
banking intermediaries. Whether sending money to a payments with caution.
friend or splitting a dinner bill, users can rely on their What P2P Payments Mean for Businesses
smartphone or computer to complete the transaction in
moments. For businesses, P2P payments present both interesting
opportunities and challenges. On the one hand,
While platforms like PayPal and Venmo dominate in integrating these platforms can enhance customer
Western markets, similar technologies are flourishing experience by offering greater flexibility and convenience.
in regions around the globe to cater to differing needs. Today’s consumers increasingly expect instant, seamless
Emerging markets, in particular, have seen significant transactions, and businesses that cater to these preferences
growth in P2P payments, offering financial access to are likely to see higher satisfaction and loyalty.
individuals who often lack traditional banking options.
P2P payments also allow businesses to reduce costs. By
These platforms have become a lifeline for unbanked or bypassing traditional banking fees, particularly those
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