While the majority of people still write a check or use cash when they owe a friend money for concert tickets or the rent, a growing number are transferring money directly to another person's bank account via the Internet or a mobile phone.
Person-to-person payments, as they are known, are cash transfers between friends, family members or service providers, such as home tutors or home repair workers.
Digital transfers for paying the mortgage and utilities have been fairly common for some time, but in recent years, several new methods have evolved to allow people to send money to each other electronically, such as a payment service used by many financial institutions known as Popmoney.
"All you need is the recipient's email address or mobile phone number," said Vera Gibbons, a Popmoney spokesperson in New York. "This will change the landscape entirely. It's a little archaic to still be using paper checks and IOUs considering that our lives are so mobile."
More than 16 billion person-to-person payments are made each year, according to an analysis done by New York-based McKinsey & Co. on behalf of Brookfield, Wisc.-based Fiserv. PayPal, major credit card providers and banks also are in the person-to-person payment business. Banks receive income from the fees associated with the fund transfers.
Demand for person-to-person payments is particularly strong among younger generations.
Pittsburgh is one of the leading markets for such payments, according to Popmoney, because of the millennials who live here and attend the many colleges and universities in the area. These payments often stem from a social situation or event.
Tom Trebilcock, vice president for digital banking at PNC, Downtown, said the bank's relationship with Popmoney dates back four years.
"If you are a PNC customer, you can send money anywhere in the U.S. to anyone with a checking account," he said, adding that PNC currently does not charge a fee for the money transfers. Transfers now take about three days, but he said the bank also is working on speeding up that process.
He said PNC customers can route funds directly to someone else's bank account. The bank will send the recipients an email notifying them to visit the Popmoney website and provide a routing number for their bank account. The bank also could send the recipient a text message notifying them to go to the Popmoney website or PNC website to receive the funds.
The sender only needs to know the receiver's email address or telephone number for a transaction, instead of a long series of bank routing and checking account numbers.
"With all the universities we have in the Pittsburgh area, we have a good customer base of young people who are interested in this service." Mr. Trebilcock said. "They tend not to carry cash and they are looking for electronic means to pay one another or pay merchants they frequent.
"Many times you will have two or three roommates and this allows them to reimburse each other for groceries or whatever expenses they share. They also can set it up for recurring expenses, like utilities and rent.
"We have even seen siblings use person-to-person payments to purchase a joint gift for their parents."
Tim Grant: firstname.lastname@example.org or 412-263-1591