Peer to Peer (P2P): Have you ever gone out to dinner with friends and realised that you forgot your wallet at home when the bill arrived? Or what if you come upon a café that only accepts cash and you don’t have any? We’ve all been in that situation! Fortunately, payment systems or money transfer apps such as Venmo, PayPal, CashApp, and others can split bills or make payments simple and painless. P2P payments, also known as peer-to-peer payments, are transactions that can be used for everything from splitting a dinner bill among friends to paying the landlord’s rent.
Through an internet or mobile application, monies can be transferred between two people using their separate bank accounts or credit cards. As more and more of these types of platforms arise, they are becoming increasingly popular among individuals of all ages.
How does Peer to Peer payments work?
Setting up a P2P payment account is usually rather simple. You will make an account on whichever platform you prefer and then link your bank account, credit or debit card to it. To improve security, some apps may demand additional verification information and passwords. You can search for other users by username, email address, or phone number once your account is set up.
Sending and receiving money is frequently as simple as a few mouse clicks. You select who you want to send money to, the transaction amount, and, if desired, a payment explanation, before submitting the payment. The time it takes to transmit money might range from a few seconds to three business days, depending on the P2P payment provider you choose.
Many apps maintain money in their database until you explicitly transfer it to your personal bank account.
How does the P2P payment app work?
Everything from splitting a dinner bill with pals to paying the landlord’s rent is done via peer-to-peer payment apps. These payments make it easier to transfer money between two people. For this, it will use their bank accounts or a payment method such as a credit card, online banking, or a mobile app. A Peer to Peer money transfer application’s detailed workflow is as follows:
Go through registration and login
It’s simple to set up a P2P payments account. Whatever platform you select, you must first register on the app by inputting personal information such as your name, bank name, phone number, address, city, and so forth. Following that, you must create a strong password or PIN.
One of the most crucial elements in the P2P payment process is this. You must complete the KYC process after finishing the registration process. After that, you must enter the information for the individual you wish to pay. The user will require the name of the person to whom he wishes to make the payment during this step.
The user must next specify how much money he wants to send. In addition, the user has the option of writing the reason for the payment. This, on the other hand, could be an optional feature.
Enter the password to confirm the transaction
The user must either enter the password he created at registration or confirm the payment transfer using OTP. In addition, if the user forgets their password, they can create a security question.
Following that, an automatic payment receipt is issued, which you can download or print. You’ll be able to keep track of your money transactions this way.
How fast are P2P payments? How much do they cost?
A customised P2P payment application enables for quick money transfers without regard to location. Peer to Peer money transfer app solutions are designed to facilitate such money transactions. When using peer-to-peer payments, keep the following in mind. The same is true when it comes to selecting a platform for your P2P payment account.
Speed of transaction: Although transaction notifications are issued quickly, it may take one to three business days for the money to reach in your connected account if you choose to move it out of the app. Others services are speedier, and some even charge a fee for immediate transactions.
Transaction fees: P2P payments can generally be made for free from a linked bank account or straight from the P2P account. However, some companies impose a fee for alternative payment methods, such as credit or debit card processing, which can be as high as 2% or 3%.
Enter data carefully: If you misspell a recipient’s name, phone number, or email address, the money may end up in the wrong hands. Before sending a payment, double-check the recipient’s information.
The advantages of P2P payments
P2P payments are linked with convenience, speed, and ease of use. While some may object to the fact that they can no longer use the “I forgot my wallet” excuse, the ease with which you may repay your friends and family is a significant benefit.
P2P payments, for the most part, work similarly to cash withdrawals from an ATM without the need to locate one to refund the recipient. Flat fees or low percentage fees are charged by some P2P payment providers. Some P2Ps, on the other hand, allow for free payment. Check with providers to discover if there are any transaction costs.
People may say “I’ll make you a Venmo” or “I’ll make you a PayPal” instead of just stating “I’ll refund you” because P2P payments are becoming so widespread.
The potential security risks of P2P payments
While P2P services are generally safe, there are still risks when sending money over the internet. Problems can develop whether you mistakenly send money to the wrong user or risk a data breach.
The biggest issue with a fraudulent or incorrect transaction is that getting a refund can be difficult, especially if you used funds from the app rather than your bank. To mitigate these security threats, several P2P payment systems employ measures such as passwords and PINs, as well as transaction alerts that check whether users have actually sent money.
Only transact with someone you know to lower your chances of becoming a victim of fraud. Investigate the types of fraud that your P2P payment system employs, as well as the company’s customer assistance network.
Although the risks of utilising a peer-to-peer payment software should be considered, they should not deter you from using this simple and rapidly developing payment method.
Some of the most popular peer-to-peer payment apps
Venmo: is a PayPal-owned mobile payment service. Venmo account holders can send money to others via a mobile phone app; both the sender and the receiver must be US residents.
Facebook Pay: Whether you’re transferring money to a buddy on Facebook, Messenger, Instagram, or Portal, the process is straightforward with Facebook Pay.
Square, Inc.: is a financial services and digital payments startup that allows customers to send money to one another via their mobile phones’ Cash app.
Zelle: is a simple, secure, and quick way to send, request, and receive messages with people you trust. For making contactless transactions with your smartphone or smartwatch, Lakeland offers Zelle and Digital Wallet.
Apple Pay: is a mobile payment and digital wallet service developed by Apple Inc. that allows users to pay in person, via iOS apps, and on the web using Safari. Apple Pay is compatible with certain iPhone®, iPad®, and Apple Watch® models.
Google Pay and Samsung Pay: are both accessible on Android phones, tablets, and watches, as well as Samsung-branded products.