When you’re out to eat with a group of friends, one check makes the server’s life easier. But when the bill hits the table, how do you split it? What if you don’t have any cash on you?
We’ve all been there. Very rarely do I carry cash, but I do have a few P2P payment apps on my phone that make it a breeze to put the money I owe right back into my friends’ digital wallets (or my hairdresser, vendors at the Farmer’s Market, my yoga class instructor … you get the point).
What are P2P payments and how do they work?
Peer-to-peer payments, or P2P payments, are today’s digital answer to cash. These money transfer apps, like Venmo, are quick and convenient ways to send and receive money directly to and from other people right from your mobile phone. Easy peasy.
Let’s keep using Venmo as an example. Once a user has signed up, they simply link an existing bank account to their Venmo account. Once it’s verified, they’re good to start transferring funds and settling up for the morning’s coffee run. You can also set up direct deposit through the app and checkout in other apps where you’ve linked your Venmo account (Uber Eats just makes it too easy to get food fast). In a few clicks, you can choose your privacy settings, and personal QR codes take the guesswork out of finding the right person to pay.
Granted, this is one specific P2P app that I’m most familiar with. There are dozens more, and they all offer a little something different than the next.
Which P2P service should you consider using?
The big question here is: What do other people in your circle use? Venmo and PayPal are the heavy hitters in my friend group, so that’s what I use the most. Other popular apps include Zelle, Google Pay, Cash App, Samsung Pay and Apple Pay and more. I’ve said it before and I’ll say it again — no matter which option you choose, read the fine print and know what your protections are.
So, is it safe to send P2P payments?
All reputable P2P payment services encrypt your information to make it harder for potential scammers to steal. But, as with any financial transaction, you should still take precautions when sending money online. I always tell members to treat their preferred P2P service like their debit card; if you wouldn’t feel comfortable swiping your debit card to make the purchase, don’t use the P2P. Once you hit that “send” button, the money’s gone.
You’ll also want to know your rights. Unlike traditional financial institutions, most P2P services won’t cover your funds in the case of fraud. Read the fine print on your platform of choice and try your best to make safe, informed decisions. (In the case of Venmo, the company doesn’t typically get involved or offer protections; still, you should report fraudulent activity so they’re aware and can warn other customers.) It’s always a good idea to double-check that the amount you’ve entered and the person you’re sending it to are correct so you know it’s going where you want it to go.
PRO TIP: MOBILE FRAUD According to the Federal Trade Commission, there were more than 70,000 reports of fraud in mobile apps in 2021 totaling $130 million in losses — a sharp increase from the year before which saw 60,000 fraudulent reports and $87 million in losses. Scammers are getting savvier, which means you need to, too. If you do fall victim to fraud, file a complaint with your Better Business Bureau. They’re required to respond to consumer complaints and may be able to help.