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Consumer Reports’ P2P Payments Ranking is Useless

Consumer Reports (CR) released its first-ever ranking of P2P payment apps, reviewing offerings from Apple, Facebook, Square, Venmo, and Zelle. It stated that:

"Our goal in testing the services was to give consumers shopping for a mobile P2P service more to go on than just a friend’s invitation—a frequent way consumers told us they currently choose a P2P service."

It rated the apps across five criteria: 1) payment authentication; 2) data security; 3) data privacy; 4) customer support; and 5) broad access.

Consumer Reports had this to say about some of the contenders:

  • Apple. Apple Pay received top marks for data privacy because its policies state that it limits the information it collects and shares on users and their transactions. It doesn’t store credit card or debit card numbers, and it states in the terms and conditions that it doesn’t sell users’ personal information to third parties. CR noted one drawback however: Apple Pay requires specific later-generation Apple hardware and software.
  • Venmo. CR noted that some consumers like the social aspect of Venmo: Unless you opt out, anyone—not just Venmo users—can see those comments and know about it when you reimburse a friend for spotting you lunch or when you ante up for your rental share. The report quoted an engineer working at a firm that assisted CR with evaluation who said, "You probably wouldn’t even realize it’s public until, say, an ex-boyfriend sees your payments to a new guy and starts to bother you.” (Side note: Yeah, that's a real problem for most of us, ain't it?)
  • Zelle. Zelle ranked below average on data security and data privacy, which were weighted heavily in Consumer Reports' ratings. The Zelle app lacks features that keep you from accidentally sending money to the wrong person. That could happen if you mistype a phone number.

The CR report didn't make much mention of Facebook's or Square's P2P services.

Consumer Reports really missed the boat on this review for three reasons. First, CR's ratings of cars or refrigerators are helpful because buyers generally need to choose just one product and need help making that choice. But the world of P2P payment services isn't like that. As an iPhone owner, I can use Apple Pay if I want and use Zelle and use Facebook. I can choose the service that is most convenient for me and the other person at that moment.

Second, while car and refrigerator features change over time, they generally don't change more than once a year. Software products are undergoing enhancements nearly constantly these days. The CR report even mentioned that:

"A Zelle spokesperson said it would soon adopt the practice of asking senders to confirm recipients before transferring the money, Keep in mind that CR rated the standalone Zelle service, not the version someone might get from their bank’s website or mobile app."

So, if CR had reviewed the services after Zelle had offered this capability, how would the overall scores change?

Third, generally speaking, while consumers may have brand preferences that lead them to say something like "I'll never buy a Honda," there's nothing stopping them from doing so. But in the P2P payment world, if you don't have an Apple iPhone, you don't care that Apple Pay was rated the highest. I'm not a big Facebook user--there's no way in the world I'm going to use Facebook's P2P service (unless you want to send me a lot of money).

Bottom line: Two takeaways here: 1) P2P use is not a winner-take-all situation--people will use multiple services; 2) The choice of P2P service needs to be determined by (at least) two people--nobody can make a choice in isolation. So nice try, Consumer Reports. Congrats on the publicity and attention you got for doing a P2P payments ranking. But it is, for the most part, useless.

Ron Shevlin
Director of Research
Cornerstone Advisors

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