With the number of members who have opted not to conduct transactions with paper checks continuing to grow, St. Cloud Federal Credit Union knew it was time to make a change.

"You'd be surprised how many of our members no longer use checks at all. That is why we felt we had to offer [person to person payments]," said Alyce Justin, executive vice president at the $100 million St. Cloud, Minn.-based credit union that serves more than 14,000 members.  

As the demand for P2P payments builds, advocates are expecting this year to be a breakthrough for the transaction services. While credit unions are eyeing its benefits to members and the potential to build revenue, plentiful providers are starting to serve up P2P, including Fiserv, PayPal, and a number of large banks such as PNC.

"It's all about convenience for our members. Some use debit cards and online bill pay, that's all. We have been looking at various solutions and finally decided on Dwolla," Justin said.

Members wanted another way to pay their share of a lunch tab, or split a cable TV bill with a roommate, Justin noted, adding Dwolla, with its online payments tools, filled the bill.

A payments innovator based in Des Moines, Iowa, Dwolla is backed by The Members Group,  a card processing and payment solutions CUSO and a wholly-owned subsidiary of Affiliates Management Co., which is owned by Iowa credit unions and their members. The firm said it has achieved significant visibility among credit unions, especially in and around Iowa.

As for the payment system's convenience, Justin said, it comes down to the ease on how the transactions are carried out.

"You can make a payment to somebody without knowing their account details," she explained. 

With online bill pay, a user has to enter account numbers for payees as well as a mailing address and a phone number. Dwolla says all that is needed to initiate a payment is an email address, cell phone number, or a social media user name from channels such as Twitter or Facebook. Those were the features that appealed to St. Cloud, Justin said.

Still, some experts say the buzz around P2P may be louder than the actual interest in the service.  

"P2P is not where people spend most of their money," said Ben Milne, CEO of Dwolla. "It is a nice feature but a limited market."

How limited?  The answer likely comes down to how and if financial institutions can bring in substantial revenue by providing P2P.

Allen Weinberg, a payments expert with consulting firm Glenbrook Partners in Menlo Park, Calif., shrugged when asked about its potential.

"I do not think there is zero revenue opportunity but I do not see meaningful revenues."

Milne agreed saying most institutions see P2P as a value add for their members.

That is certainly the case at St. Cloud, Justin said. The credit union provides the service by linking interested members to Dwolla, which collects a 25 cents fee for each transaction. Transactions under $10 are not charged a fee.

"Other than the initial implementation cost, we do not make any revenue or have any ongoing costs associated with Dwolla," Justin said.

At UNI Federal Credit Union in Cedar Falls, Iowa, marketing executive Robert Allen Hill said the $20 million institution makes no money from Dwolla but sees P2P as a service for its members.

While Dwolla's fees may seem low to some credit unions, they may be in line with market realities.

"P2P is not a spectacularly great market. People are not willing to pay that much to pay each other back," said Jonathan Bittner, co-founder of Cambridge, Mass.-based Splitwise, a bill sharing site.

That is the rub, some experts point out.  While P2P may make sense on paper as a digital way to carve up small bills, what will users pay for it?  Bittner suggested that the answer is not much.

PayPal, for instance, said it prices its P2P at zero and, in the eyes of some experts, that may be the final word on pricing.

Fiserv, the Brookfield, Wis.-based financial services powerhouse, which has large eyes for P2P's potential and is busily trying to sell it to credit unions, may disagree on the cost to offer the service given its growing demand.

"We think the market opportunity is big. This is a new technology that will be part of everyday life. The interest in P2P continues to accelerate," said Neil Platt, a senior vice president in Fiserv's CashEdge division.

But are there revenues? Yes. Sort of. 

"Some financial institutions don't see the need to monetize this," Platt suggested. "Institutions will give away a certain amount of P2P – most likely as a low value, less specialized transaction. A transaction of $100 that takes a day or two to process probably will be free. A same day transaction involving $2,000 will involve a fee; so will cross-border money transfers."