P2P Goes Open Loop So Anyone Can Pay Everyone

June 14, 2021

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In the ancient world, trade between civilizations was highly inefficient. To conduct commerce, a seller and a buyer had to agree to converge in a common location and overcome the barriers of an uncommon language and currency. This friction led to the eventual rise of Mesopotamia as a crossroad — the world’s centralized trading hub. In Mesopotamia, any civilization, regardless of its scale or sophistication, could participate in the global commerce of the day.

Modern global commerce would be unrecognizable to the traders of 5,000 years ago, and yet peer-to-peer (P2P) money transfer now faces the same basic challenge: the emergence of multiple P2P platforms that each operate independently, as walled gardens. To participate, senders and recipients have to converge there, speak the same language, and agree to trade in the same currency.

“One of the biggest points of frustration [with P2P payments] is that everybody wants to receive money in a different way,” Ingo Money CEO Drew Edwards told Karen Webster. “And the burden is on the sender to establish multiple account relationships with Zelle, Venmo, PayPal and Cash App, for example. A sender has to keep track of who wants to be paid which way and then move their own money there so they can send it.”

To send and receive money, the sender and receiver both have to agree to participate in the same platform. That creates a burden for the sender, as Edwards described it because senders must have different apps to accommodate each receiver’s preference.

It’s a problem Edwards said Ingo is innovating by enabling “anyone to everyone” payouts capabilities on the Ingo Instant Money network. This open-loop P2P network capability means that the only thing that a sender must now do is select the receiver. There’s no need for senders and receivers to belong to the same network. In Ingo’s world, the P2P network becomes any originating and receiving account, including more than 300 brands and 30 different ways to move money into an individual’s bank account instantly that currently use the Ingo network for digital payouts.

“All the sender has to do is select the recipient,” Edwards said.

From Anyone To Everyone

Edwards said the move into open-loop P2P is the next natural extension of Ingo’s efforts to give receivers — consumers and small- to medium-sized businesses (SMBs) — access to their funds wherever they want, instantly and on demand.

A decade ago, that was a “me-to-me” network that helped consumers turn a paper check into usable funds without going to a bank. Over time, this network has grown to one that powers more than 300 brands — from PayPal and Venmo to Green Dot and NetSpend — to give consumers an easy access point for turning checks into digital payments.

Corporates wanted to do the same thing — replace checks with digital payments — and Ingo scaled its “me-to-me” network into a “one-to-many” B2C network, powered by a digital payouts experience that helps businesses send people money to support any number of use cases: loan and line of credit disbursements; wages and tips; insurance claims; contractor payments; agent commissions; incentives and rebates; and more. Edwards said that Ingo’s event-driven disbursements marketplace platform solves the same challenge for enterprise corporates, facilitating end-to-end digital engagement for single-party and multi-party, one-time, ad hoc and recurring payouts to consumers and businesses.

“For the large corporate, we have replaced the ubiquitous acceptance of the paper check with the ubiquitous acceptance of payment choice,” said Edwards.

Ingo’s expansion into open-loop P2P is the next natural evolution of its Instant Money Network into a payments arena that needs streamlining, he said. Today’s P2P landscape is complicated, as there are now five or six major players — all with scale and all offering a free service, so long as the sender and recipient both agree to sign up and keep their money there.

What Ingo is doing at the most basic level is “applying our network to the P2P use case so that anyone can pay everyone, no matter where they want to receive their money,” Edwards said.

That means to any app, across any operating system, to any account endpoint.

A Universal P2P Network

The open-loop P2P payout is something that Edwards said Ingo is prepared to do now — at scale and safely — given its two decades of experience managing risk across tens of millions of senders (originally check writers) and recipients.

“Risk management is a fundamental component of our Instant Money Network, and we haven’t stopped refining it from the early days of our me-to-me business,” Edwards said.

He said that as the historical data captured as part of the Ingo network continues to grow exponentially, the tools and techniques the company applies to model, score and monitor risk have also become increasingly automated and intelligent.

As a consequence, Ingo can now facilitate a fully digital money transfer experience from any account to any account. A sender needs only to pick who they want to pay and how much. They can leave it to the recipient to decide where and how quickly they receive it.

Edwards predicted that decoupling the choices of where and how senders and recipients move money between them will prove to be critical going forward. Some senders will want to send instantly. Some receivers will want to receive instantly. Both cases open up a monetization opportunity for network participants.

“Proof points are abundant,” he said. “If you give people choices, many will pay for speed. Our network participants have an opportunity to share in that revenue.”

What’s Next

Ingo’s open-loop P2P is designed to create a broad, cross-issuer and cross-platform view, making it possible to send money to anybody from anywhere, and be sure they can receive it however they want.

“To make open-loop P2P work, it’s essential to have a view of the whole landscape, not just one narrow slice of it,” Edwards said. “It’s a level of inclusivity that is only possible when there’s a lot of choice baked in.”

Ingo’s open-loop P2P network will go live later this year. Edwards said that the P2P use case is one of the next great “nails” in the evolution of the “hammer” that is its Instant Money Network.

“It eliminates friction for both parties to a payment and adds the inherent benefits of a universal network — scale, ubiquity, inclusivity and risk management visibility — for account issuers.”

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