It's no secret that the U.S. and much of the rest of the world is slowly transitioning away from cash and toward electronic forms of payments. However, not all transactions can be made electronic with credit or debit cards alone. That's where person-to-person payment apps come in.

In this Industry Focus: Financials clip, host Shannon Jones and contributor Matt Frankel give listeners a rundown of this young but rapidly growing industry.

A full transcript follows the video.

This video was recorded on Aug. 31, 2018.

Shannon Jones: Before we dive in, let's talk a little bit about what this entire industry is and how they make money.

Matt Frankel: Yeah, I definitely am a late adopter here. I used Venmo for the first time about two months ago. But now I use it all the time. I definitely see the utility. I'm a big Square Cash fan, I've used that a few times. Zelle is integrated into my bank account, the one that we're going to talk about in a minute.

Basically, these are all ways to play a trend known as the war on cash. The war on cash is the new term for the trend toward a cashless society. More people are using credit cards and debit cards than ever before. I just read a statistic that the number of people who say they primarily use cash in the United States is down to 10% from about 20% five years ago. This is a rapidly expanding trend. Debit cards and credit cards took care of a lot of the issue, but there was still a need for certain transactions to be able to be made cashless. For example, when you're out to dinner with friends and you want to split the bill, a lot of places won't split a check and let you pay on your debit card for your portion. What these are apps allow you to do is, in those cases, send money for your portion of the bill directly to your friends. Venmo, Zelle, Cash.

This has been a really underserved part of the payments industry until very recently. That's why a lot of apps have sprung up. I know Amazon, Apple, a bunch of all the big ones have their own person-to-person payment apps. But the three big ones have definitely become Venmo, Zelle, and Square Cash. It's really picking up in America, and there's still a lot of room for growth. This is definitely a big trend and worth paying attention to.

Jones: Just to underscore that point, according to one market research company, eMarketer, they're actually estimating the total value of mobile peer-to-peer payment transactions could rise to nearly $244 billion by 2021. That's up from an estimated $156 billion in this year alone. Just to reiterate, the opportunity is huge, particularly with millennials who have been really among the first to adopt these new payment platforms. It's really no wonder why you see so many jumping on to the P2P space. It comes down to speed, it's also convenience and ease of use across many of those platforms that you mentioned.

Matter of fact, last week, I actually did some workshopping. Here at The Motley Fool, we've got a Slack channel just dedicated to selling things that maybe we have no use for or want to get rid of. I very easily was able to pay a colleague simply by knowing what her phone number was for a particular piece of furniture. The ease, the convenience, the simplicity of the entire space is a huge opportunity, and you're really starting to see it pick up even more steam.

Now, one thing I would also mention, too, is, one of the biggest advantages, one of the biggest draws into the space, really comes down to the cost factor. For me, and using Venmo, using Zelle, using Square Cash, the cost in some cases are either completely free or I'm paying a percentage of the transaction. Matt, can you talk a little bit about how many of these platforms and these providers are finding ways to monetize these peer-to-peer payments?

Frankel: Well, most of them aren't really monetizing them yet. I know Square very well, I'm pretty sure Square's actually losing money on its Cash app, and a pretty significant amount. We'll talk about the long-term money-making opportunities a little bit later on. But the point to take away for right now is that these companies really aren't making money. As you mentioned, generally, this is free. There are some fees. For example, Square charges a 1% fee if you want your money in an expedited fashion. Venmo charges a 3% surcharge fee to use a credit card. But, other than that, there really aren't that many fees associated with these. In and of themselves, these are not giant money makers for these companies -- at least not yet.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Matthew Frankel, CFP owns shares of AAPL and SQ and has the following options: short December 2018 $90 calls on SQ. Shannon Jones owns shares of AAPL. The Motley Fool owns shares of and recommends AMZN, AAPL, and SQ. The Motley Fool has the following options: long January 2020 $150 calls on AAPL, short January 2020 $155 calls on AAPL, and short September 2018 $80 calls on SQ. The Motley Fool has a disclosure policy.