Select Page

What Are Peer-to-Peer Payments? PayPal, Venmo, Square Cash And Others

What Are Peer-to-Peer Payments? PayPal, Venmo, Square Cash And Others

Want to send money to your friends, to strangers, to president Trump? If you do, then you should probably use a peer-to-peer payment company. You can use your bank to transfer the money, and you can use a transfer company if you are sending money abroad, but if you are sending money to people in your own country, then it is cheaper, easier and faster to use a peer-to-peer payments company.

What Are Peer-To-Peer Payments?

It is the process or action of sending money from your account to another person’s account. It is not the same as paying a freelancer or contractor because that usually involves other steps such as an invoice and personalized receipt. Peer-to-peer payments simply involve sending money from person A to person B.

You can send money via your bank if you wish, and for that you need the person’s bank details. Or, you can use a transfer or peer-to-peer payments company, in which case you may only need the other person’s account ID, email address or phone number.

How Do P2P Payments Work

They either work by instructing one bank account to send money to another bank account, or with the use of a third-party money account. A third-party money account has money place into it, and the money is sent to another person who also has an account with the third-party money company. In the image below, you can see how a transfer company works and how a third-party money account works.

Are Peer-To-Peer Services Safe?

There are quite a few security issues involved with sending peer-to-peer payments and there are a few issues you should be aware of. Few of them are very serious, and none pose an immediate threat unless you are careless with your account and do something silly like giving your password away. Here are a few factors to consider.

All Accounts Are Encrypted

Modern peer-to-peer payment systems use encrypted software and they use bank-level security to encrypt payments when they send them.

Third Party Accounts Protect Your Credit Card And Debit Card Details

If you are buying something or even sending a transfer, it may mean you have to give away your account information, debit card details or credit card details. P2P payment companies hold your details and do not give them out when they transact transfers.

Lots Of Email Scams

Peer-to-peer payment companies are hot targets for online criminals, which is why you will probably receive spam emails from companies pretending to be your peer-to-peer payment company. They do it to try and get your payment information.

Email technical hacker with a hood

Many Social Media Scams

Social media networks are just as full of scams that try to get your password or peer-to-peer account details from you. Many try to get you to send peer-to-peer payments through them in order to steal your details.

There Are Thousands Of Fake Website Scams

The most common scam is to create a website that looks just like the website your peer-to-peer transfer account uses. It looks like the company you registered with, which may fool you into entering your login information.

Change Your Password Frequently

If you wish to stop crackers from trying to figure out your password, you should change your password frequently and try to make it reasonably complex.

Write Your Password Down On Paper And Not Digitally

Make a note of your complex password and keep the paper somewhere safe. If you store the password digitally, then there is a chance a hacker may see it one day.

money in a womans hands - Peer-to-Peer Payments

Write Your Security Answers On Paper And Not Digitally

You should also write the answers to your secret questions on a piece of paper in your home and hide it because hackers will search your digital files for the answers to your secret questions too.

Give Fake Non-real Secret Questions That You Write Down

Since you are writing down your secret answers, there is really no point in trying to remember them. With that being the case, why not add very random and weird answers to your secret questions so that hackers cannot guess them.

Link Your Mobile Phone Number To The Transfer/Third-Party Service

Not only will this make it a little quicker to change your password, it will also send you an alert if somebody else tries to change your password.

Add A Pin If Possible

There are some peer-to-peer companies that allow you to add in a password and a pin. If they give you the option, then you should create a pin too.

Change Your Password Every 72 Days

If you can set your password to expire, then set it to be changed every 72 days. If crackers are using brute-force attacks, then changing your password every 72 days should throw them off.

Choose A Very Strong Password

You are writing your password down anyway, so add in as many numbers and characters as you wish. Add in uppercase and lower case letters to make your password stronger.

Opt For Notifications About Your Transactions

Alerts and notifications are convenient because they let you see confirmations that your payments have been processed. They also let you know if somebody else has been using your account because you will see payment or transfer confirmations.

Set Daily Payment, Withdrawal And Transfer Limits

You should set daily payment, withdrawal and transfer limits to lessen the damage a successful hacker can do. For example, if you set your limit to $100 per day, then it will take a hacker far longer to clear your account.

Don’t Transfer To Strangers

If you are buying something, then use an approved and secure checkout. If you are paying a contractor, then use a suitable payment system. Only transfer money with peer-to-peer payments if you know whom you are sending it to.

Link Up Your Bank Account With Your P2P Payments Account

The FDIC recommends linking your bank account or your credit card to your transfer account so that if you are defrauded, you have more protection. The investigative services will be able to dedicated more resources to your investigation, and there is a mild chance you may get your money back.

How Fast Are Peer-To-Peer Payments

Many of them transfer your money instantly, even though most of them ask you to give them between two hours and two days. In most cases, if you are transferring nationally, the transaction will take place within an hour or two.

What Sort Of Fees Do P2P Services Charge?

The cost of peer-to-peer payments varies dramatically, but most P2P payment companies will not charge you anything if you are sending less than one thousand dollars. That is only and if you are using the service for personal uses and not for business uses because in those case either you or the recipient will have to pay a fee. Some P2P payment companies make their money from charging private senders as well as business senders. Others make their money by charging the recipient.

Peer-To-Peer Services May Experience Delays

Just a quick warning–there are times when your peer-to-peer payments will turn up late. There are many reasons for this, such as security issues, server issues and account problems. There are even times when your payments will be delayed because you tried to confirm the same transaction more than once.

Errors May Occur That Will Tie Up Your Money Until The Problem Is Resolved

No peer-to-peer payment company is perfect. If you read online reviews written by users, you will see a slew of different problems that users have experienced with their third-party/transfer accounts. Don’t expect a smooth ride every time.

Popular P2P Payment Services Are More Convenient

In other words, if a peer-to-peer payment company is popular, then it becomes more convenient to use. Take PayPal as an example. PayPal is a very popular third-party money service that allows you to fund your account and then manipulate your money. You can transfer it, withdraw it, convert it and spend it.

If 9 out of 10 of your friends have a PayPal account, then transferring money is very easy and convenient around 90% of the time. If you had 10 friends and each used a different peer-to-peer payment company, then you would have to sign up with ten different P2P companies in order to transfer money to all ten of your friends.

A List Of The Most Popular Peer-to-Peer Payments Companies



+ Use your bank to fund your circle transactions and there are no fees
+ You are charged a fee if you fund your circle account with a credit card
+ The circle app uses Bitcoin
+ Your money will be automatically convert U.S dollars
+ Your Circle account is FDIC insured
+ The app has a touch ID and PIN code to secure your phone
+ Set limits for how much you send per day
+ Receive text alerts
+ Send money around the world to friends and family
+ Has bank-level security



+ Clearxchange does not transfer any of the funds, they only provide information to member banks
+ Send money using the recipient’s mobile number or email address
+ Recipient must have U.S bank account
+ Receive transfer notifications though via email or texts
+ Create a Clearxchange profile to deny or authorize payments
+ Clearxchange uses bank-grade security
+ It has time-out settings if you are away from the site for too long
+ Clearxchange is easy and makes secure P2P payments



+ Dwolla has a Masspay service so you may send multiple payments at once
+ Pay monthly bills with their app
+ Dwolla has high transfer limits
+ You may remove monthly or weekly limits
+ Personal accounts have a limit of $5,000 per transaction
+ Dwolla does not charge transfer fees
+ Auto-withdrawals may take a day or two to process
+ Your money is not FDIC insured
+ To log in to the app you need a password and mobile number

Google Wallet


+ You can store money in your Google Wallet account instead of simply transferring it
+ The app will notify you of a low balance with alerts
+ With a Google Wallet card you can use it like a debit card in stores that accept MasterCard
+ You are able to use ATMs to withdraw money
+ Google Wallet has security features to make it safe
+ All the data is stored and encrypted in Google’s secure locations
+ Their is a 24/7 fraud monitoring
+ You will need to remember your PIN to send money
+ You can freeze account if you lose your phone or Google Wallet card

Messenger app


+ With Messenger app you cannot cancel a transaction once it has been made
+ If someone sends you money you cannot decline it if a debit card is connected to your account
+ The Google Wallet app is free to use
+ You must be 18 years or over in the U.S and must have a U.S debit card
+ When using Messager for sending or receiving money, you have to follow the rules of Facebook
+ If you don’t follow the rule you will be disqualified
+ The app is not for buying or selling items
+ Facebook does not allow P2P payments for businesses
+ Other uses are not protected from fraud
+ Send and receive money from people you know
+ The only people who will see the transaction is your friend and yourself
+ Your information is safe on the Facebook’s servers
+ With Facebook being so popular, you have to still be careful of scammers



+ Sending P2P payments will not cost extra
+ Business transactions will cost a fee
+ Use PayPal’s personal account for selling and buying goods without paying a fee
+ You will need to deposit money from your bank account to your PayPal account + With PayPal, you can link up eight bank accounts
+ You will be required to have the recipient’s mobile number and email address
+ PayPal it is not just for the UK or the U.S, it may be used around the world
+ PayPal has security, fraud protection and customer services to handle disputes + There may be a limit on how much money you can send each month
+ Remove limits by verifying your account

Square Cash



+ You will need a MasterCard, Discover debit card or a Visa card
+ No third party accounts; it will be sent straight to your account
+ The process for P2P payment will only take 1-5 days
+ Square Cash offers private peer-to-peer payments
+ You can use Square Cash for business transactions
+ Using your debit card it is fee free
+ Using a credit card will cost a fee
+ Cashtag is a function you may use with Square Cash to send money without sharing your phone number or email address
+ They use a level 1 encryption and provide a pass code
+ To insure your account it will cost $250 a month



+ Set up recurring payments
+ You may request money from groups and individuals
+ Popmoney has thousands banks as part of their network
+ Register on their website to use the Popmoney service
+ There are transactions fees of $0.95 with Popmoney’s P2P payment service
+ It is free to accept money
+ Popmoney has limits on how much you can send per day
+ Transactions may take one or two days to go though
+ If using your debit card, it will be sent to you the next day



+ Skrill has a free account with which you may transfer money for free
+ It has a anti-fraud team to protect every transaction
+ With a free account, you can receive money, send money and spend money
+ You can use the app on your mobile and desktop device
+ Set up the account with your debit or credit card via a paysafecard
+ You can use Skrill for shopping, gaming, trading and betting
+ There is a support team if you have any issues
+ Sending money to another Skrill wallet will cost 1.9% of the amount you sent



+ Snapcash is only available in the U.S
+ Over 18s only
+ The app works on Android phones an Apple devices
+ To use the account, you will need your debit card details
+ P2P has a fee of 3 percent if you use a credit card
+ Using the Square payment processor, you can send money to people even if they don’t use Snapcash
+ There is a limit of $250 for a single transaction
+ You can transfer more money up to $2,500 if you provide additional identification
+ The app has a security code to protect you when you send money
+ This P2P app is not for snaps, stories or for business transactions



+ Venmo offers person-to-person transfers which are free with this app
+ Will not charge you to send money from your bank account to your Venmo account
+ Fee free if you use your debit card to transfer
+ When sending money, there may be a three percent fee when using a credit card
+ Receiving money is fee free
+ The Venmo peer-to-peer payment app contains a social component
+ Record and post your transactions online
+ Friends may comment on your post
+ The social element is helpful for coordinating events
+ With the app, you have a option of having a PIN code for security
+ If your mobile is stolen, you may remove access from that phone
+ Venmo is also has data encryption to keep your money safe
+ The app does not allow merchants on via Venmo
+ Does not have seller or buyer protection

About The Author

Ash The Great

After a varied career in different industries from the hospitality industry to the financial consultancy industry, Ash now spends his days working as a professional writer.

Leave a reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Popular Posts