PayPal introduces money bumping
PayPal today introduced the “bump” metaphor to person-to-person (P2P) payments. Users can now bump their phones together to send money from one person to another.
Is it a gimmick? Yes. However, I think bumping is a great physical metaphor for sending money from one person to another. Semantically, I find it clumsy to talk about “bumping” money to someone else. I like Canada’s Zoompass terminology much better (e.g. “Hey, zoom me some money for the beer tab.”)
I don’t think this changes P2P fundamentally either. Except for the ubiquitous pizza metaphor, most of the time I want to send money to someone, I’m not standing beside them. And if I am, most of the time I would feel awkward actually touching the person. Imaging bumping someone for admission to a high school football game. Imagine bumping a street vendor for a newspaper or flowers. Imagine bumping a scalper for tickets outside the game.
If P2P is to succeed, it has to replace cash and checks. I use cash as little as possible and usually with informal merchants (or individuals). I use checks when I need to send money to informal merchants through the mail.
PayPal is an interesting model and will likely be one of the P2P networks that will succeed. PayPal already has a huge number of accounts with a broad international presence. More importantly, PayPal has done a good job of encouraging account holders to connect their PayPal accounts to bank accounts. For these users PayPal acts as a proxy for the underlying bank accounts. Funds can automatically flow from the senders bank account through PayPal to the receiver’s bank account.
CashEdge has built a similar model that’s more bank-centric. CashEdge has provided money transfer software to banks for years. When bank customers send money to someone the money flows automatically into the receiver’s bank account. In both the PayPal and CashEdge models users have to configure the default bank account information when they first use the service. Afterward everything happens automatically.
PayPal’s advantage is that it has 78 million active accounts internationally and some really snazzy apps. CashEdge is attractive because it’s plugged into hundreds of banks. Some users will prefer using their bank. Some users will prefer PayPal. The key for P2P is getting people comfortable with the idea of transacting electronically between individuals.
Bumping and zooming makes it more fun.