Peer-to-peer payments, or digital transactions made between two individuals, have risen in popularity in recent years. One of the most popular P2P payment platforms, Venmo, has gone from a relatively unknown service to a household name, with users often heard saying “I’ll Venmo you” (or pay you back for dinner, groceries, a movie or anything else that used to be far more difficult to split with cash). While P2P payments don’t currently play a role in the retail space, their popularity does speak volumes about mobile adoption and the future of payments.
Here’s what you need to know about P2P payments:
There are Some Unlikely P2P Payments Players
While Venmo is most frequently associated with this type of payment, even Facebook and Snapchat’s Snapcash have gotten into the game recently, allowing users to send and receive payments in the same windows they send photos and messages.
The popularity of P2P payment services doesn’t stop there. Recently, Apple applied for a patent to use Bluetooth and NFC services to let users send and receive money. Meanwhile, when Google released Android pay in September, its old payments app, Google Wallet, entered the P2P payments market, allowing users to transfer money with nothing more than an email address.
Most P2P Payment Services Work in a Similar Way
Users of these services connect a credit or debit card account or fill in their bank account information to participate. From there, the process is simple. Users can make a payment, request a payment, receive money and have available funds transferred to their bank account.
In the case of Facebook, which allows users to send and receive money using its Messenger service, payments are made by clicking on a dollar sign button and typing in a payment amount. If the user on the other end of the transaction doesn’t have a card linked to Facebook, he or she will need to upload one to receive the money. If a card is attached, that amount will go straight to the connected account in 24 hours.
Security features differ from service to service, but in the case of Facebook, security questions could be asked and both parties involved in the transaction always receive a confirmation. Mobile iOS users can also sync Messenger payments with their Apple ID or fingerprint authentication. For Venmo, users must log into their account before making or receiving any payments, and the platform offers the option of requiring a PIN to use its mobile app for added security.
Popular P2P Payments Offerings are Free—or Mostly Free
Across the world, $1 trillion is exchanged using these services—that’s a lot of money exchanged for a service that ranges from being free to only taking a nominal fee. For example, Venmo charges users paying with credit cards or certain debit cards a 3 percent fee, though linking a bank account to the service or using a major debit card brand is an easy way to avoid this charge, and users who receive money will not be charged. Social networks- turned payment platforms like Facebook and Snapchat, on the other hand, have no associated fees.
SaleManager is always on the looko out for new payment technologies.