Pay Me with Venmo: Effect of Service Providers Decisions to Adopt P2P Payment Methods on Consumer Evaluations

Using a payment method is an indispensable part of any transaction in the marketplace. While traditional payment methods are still responsible for the majority of transactions in the marketplace, new Peer-to-Peer (P2P) payment methods have rapidly grown in the last decade, with an adoption rate of 52.1% in 2017. Notably, while originally P2P payments were ottered exclusively for interpersonal transactions, the use of P2P payment methods in business transactions is expected to reach $74 billion dollars in 2021. Yet, little is known about how these new payment methods impact consumer perceptions and willingness to transact. Our work has both theorelical and managerial conlributions. Prior work on payment methods has almost exclusively focused on the differences in experienced pain of payment between the payment methods and its consequences for amount and type of product purchased. The paper extends the literature by showing that payment methods can have a broader impact on evaluations of business, specifically judgments of competence of service providers.