Spending your money has never been easier.
You can make a payment on Facebook Messenger FB, -0.33% through iMessage, through email, through friend-to-friend payment apps like Venmo PYPL, -0.37% and Square Cash SQ, -0.91% and on Amazon’s AMZN, -0.03% hands-free device Alexa. And if you needed one more way, now you can also pay your friends through Skype’s mobile app.
Consumers using the video-chatting and messaging service Skype will be able to send money to the person they are speaking with, through PayPal, starting Wednesday. They will not have to leave the Skype app to do that. PayPal and Skype’s partnership will be available in 22 countries including the U.S., U.K., Canada, Finland, France, Germany, Italy and Spain.
Mobile peer-to-peer payments are forecast to exceed $65 billion by 2021, up from $14.9 billion in 2015, according to mobile payments forecast data from Forrester, a market-research company. Venmo processed $8 billion in transactions in the second quarter of 2017, up from $6.8 billion in the first quarter. It is currently only available in the U.S.
Consumers are getting more comfortable with payment apps. People don’t want to fumble with credit card numbers and security codes. They’re less willing to type their credit-card details into an online form than they were even five years ago, said Bill Ready, PayPal’s chief operating officer. “Now everyone has experienced seamless transactions, everyone’s had an Uber ride, or had a PayPal one-touch transaction,” he said. “Expectations are changing significantly.”
Despite digital payment options picking up steam, there are still a lot of consumers who prefer cash, Ready said. In fact, some 85% of transactions worldwide still happen in cash, according to research from Mastercard MA, +0.86% and consulting firm McKinsey.
Still, many consumers are not yet comfortable with making payments on apps like Venmo and iMessage, and view peer-to-peer payments as “a wild, wild west right now,” said Michelle Evans, the head of digital consumer research at Euromonitor International, a market-research firm. Some 60% of consumers said they use cash to make payments at least daily or weekly, more than debit cards (58%) and credit cards (53%) and checks (20%), according to a 2016 survey of 4,000 consumers in North America by consulting company Accenture. That’s far more than PayPal (18%) or other mobile payment apps issued by retailers and restaurants (16%).
However, respondents in that Accenture survey said they are likely to use more digital payments by 2020. And nearly one-third of millennials (32%) use their mobile phones for peer-to-peer payments, compared with an average of 18% for everyone else.
Despite large investments by banks and financial technology companies in new services, mobile payment adoption has been slow in the U.S. in the last several years. And Skype will have an uphill trek to gain a foothold: 44% of millennials already use Venmo often, a survey of 2,000 young Americans released in April found, while only 1% used the similar service Square Cash.