The last decade has seen a surge in new methods for making person-to-person (P2P) payments. Despite the surge, studies show that US consumers still prefer to make P2P payments with cheques and cash. In fact, P2P payments by cheque are the only method of payment that is still increasing.

Terri Bradford and William Keeton of the Kansas City Fed provide a detailed analysis of how each of the new P2P payment methods works and evaluate the extent to which they meet consumers’ needs in terms of speed, payer control, security and universality. The authors then provide a summary of the gaps that remain in P2P payments services and discuss the role the Federal Reserve could play in facilitating innovation in this area.

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