AI Disclosure: Our writers and editors used an in-house natural language generation platform to assist with portions of this article, allowing them to focus on adding information that is uniquely helpful. The article was reviewed, fact-checked and edited by our editorial staff prior to publication.

If you’ve ever been in the predicament of needing to pay someone back for a coffee, or for splitting a meal, you might’ve heard about peer-to-peer (P2P) payment services.

P2P payments are transactions between two parties with separate bank accounts. A P2P service mediates these transactions by allowing consumers to send money to another person’s bank account through a third-party website or mobile app. Many consumers use P2P services, but you might still be wondering how they work and whether they’re safe. Here’s what you need to know about P2P payments.

Key takeaways

  • P2P payment services are transactions between two parties with separate bank accounts, mediated by a third-party website or mobile app.
  • Each P2P service has different rules for what kind of accounts can be linked, and fees for instant transfers or international payments may be charged.
  • P2P payments can be convenient, but users should protect their login information and know who they're sending money to in order to protect themselves against potential cybercrimes.

How P2P payments work

When an account holder signs up for a P2P payment service, they need to connect a personal bank account to it, typically through an online portal or mobile app. Different services have different rules for what kind of accounts can be linked to the P2P service. Some, for example, may allow customers to link a savings account to deduct payments while others don’t. Other users of the service can find and send money to your P2P account by searching your username, email or phone number.

Users can directly transfer money from their linked accounts to another user’s P2P account who is signed up with the same provider. In some cases, when a user receives money, it’s automatically deposited into a linked bank account, but several products require a secondary step to transfer funds from the app to the linked bank account. The amount of time it takes for money to transfer into a bank account can vary between different P2P accounts and may take from a few seconds to several business days.

Who offers P2P payments?

There are many P2P services on the market, but here are some of the most popular ones.


Zelle users can directly transfer money between one another. Users simply search the email or phone number of another Zelle user and can then send money directly to their bank account, typically within a few minutes. Unlike some other P2P products, Zelle can be accessed directly from many banking apps. Most of the big banks are partnered with Zelle and automatically provide the service to customers, including TD Bank, Bank of America, Truist, Capital One, Chase, PNC, U.S. Bank and Wells Fargo.


PayPal is a global P2P service, meaning that users can send and receive money internationally. PayPal offers a service called Xoom that comes with a user’s PayPal account and converts foreign currency. There’s no fee for sending money from a PayPal account or bank account, but the service charges 2.9 percent plus a fixed fee on domestic and 5 percent on international payments made from a linked card. Users also have the option to make instant transfers from their PayPal to their bank accounts for a fee, or else they may make a standard transfer for free, which takes one to three business days. PayPal’s services can be accessed on its desktop site or mobile app. It is not affiliated with any specific bank, but any bank account can be linked to a PayPal account.


Venmo is a popular, mobile P2P service owned by PayPal. The services it offers are similar to PayPal, but it can’t be used for international transactions and money can only be sent through a mobile app. Venmo allows instant transfers to a bank account for a 1.75 percent fee, or users can make a free, standard transfer that takes one to three business days. With Venmo, users can also send requests to other users with a memo, such as a request for a shared utility bill.

Cash App

Cash App is another mobile P2P service, available in the U.S and U.K. Payments can be made between mobile app users and they can send money from a linked debit card, credit card or bank account. Standard one-to-three day transfers are free, while instant transfers come with a 0.5 percent to 1.75 percent fee.

Google Pay

Google Pay is a P2P app that requires a Google account to use. A Google Pay account can be linked to a debit card or bank account to send and receive money. It also allows users to link their PayPal accounts, allowing them to use their PayPal balance for transactions. In addition to P2P transactions, users can make purchases using Google Pay either through contactless payments in stores or online. It takes one to three business days for money to transfer into your bank account from Google Play. If funds are transferred to a debit card, the transfer is usually instant, but there’s a fee of 1.5 percent or 31 cents, whichever is higher.

How much do P2P payments cost?

P2P payment services typically charge nothing to use or to download their products, but there are a few fees that may be charged in certain circumstances, including:

Instant transfers
Some of the P2P apps give users the option to make either a standard or instant transfer from the app to a linked account. Standard transfers are free, but it may take a couple days for the money to show up in your account. If the funds are needed instantly, you'll pay a small fee. Cash App, for example, charges a 0.5 percent to 1.75 percent fee for instant transfers. Zelle and Popmoney partners with many banks and charge no transfer fees.
Debit or credit card fees
Usually using a bank account to send money through a P2P app is free, but if a user needs to link a debit or credit card instead, there may be a fee. For instance, PayPal charges 2.9 percent plus a fixed fee (that varies by country) when money is sent from a linked debit or credit card.
International fees
A few P2P services allow for payments to be made between users in different countries. International transactions come with a fee, such as the 5 percent international fee that PayPal charges.

What methods do P2P platforms use to transfer funds?

Technologies used among P2P platforms vary. Some P2P payment networks incorporate blockchain technology to increase the security, transparency and traceability of transactions. The inclusion of cryptocurrencies in these platforms helps facilitate swift, borderless and cost-effective transactions. What’s more, artificial intelligence is being used in the detection and prevention of fraud in P2P payment systems.

Which P2P payment provider is best?

Though all P2P payment providers allow users to digitally send money to other people, they come with different features and fees.

P2P services provided by a bank, like Zelle, may be more convenient because they can be accessed directly from the bank’s app. But they do have some limitations, such as on who you’re able to pay.

Alex R. Jimenez, managing principal for financial-services consulting at EPAM Systems, prefers Venmo, which isn’t partnered with any bank. “When you’re making purchases with certain organizations, you’re able to use Venmo, but you’re not allowed to use Zelle. Mom-and-pop places — or even a plumber I had come — say you can pay with Venmo; Zelle wouldn’t really be appropriate for that.”

P2P services typically only allow users to send and receive money to others in the same network, so which service others around you use may factor into your decision about which app to choose. If a recipient uses Venmo, for example, but the sender only downloads Cash App, they won’t be able to send money between each other.

Meanwhile, for someone who needs to send money overseas, a service that offers international payments may be best. PayPal offers services around the globe, and Cash App is another option available if you need to send or receive money from the U.K.

Are P2P payments safe?

Although P2P payment apps are popular and convenient, there’s always a risk associated with using them.

“The companies that own these apps feel that they aren’t covered by some of the laws that regulate payment services,” says Linda Sherry, a consumer advocate and former director at Consumer Action, a nonprofit. “It’s this large loophole where people can be defrauded pretty easily, when a bad actor convinces consumers they’re a member of the bank or in charge of fraud at the bank.”

The Consumer Financial Protection Bureau (CFPB) is responsible for protecting consumers against fraud, but, according to Consumer Reports, regulators don’t enforce CFPB regulations in the context of P2P payment apps. As a result, consumers are held responsible for errors, such as sending money to a scammer.

Sherry recommends that consumers only use P2P payments among people they know. “Know who you are sending money to, and be suspicious,” Sherry says. “If it sounds too good to be true, it probably is.”

How do P2P payments safeguard transaction information?

Many P2P services use encryption to protect sensitive data, such as account numbers and transaction details. This means that your information is turned into a complex code before it’s sent over the internet, making it difficult for hackers to intercept and decipher. In addition to encryption, P2P services often use secure socket layer (SSL) technology to provide an extra layer of security. SSL technology ensures that the information you send is only accessible to the intended recipient.

What’s more, many P2P services offer multi-factor authentication, adding another layer of protection against unauthorized access to your account.

How do P2P payment platforms protect users from potential scams?

Many P2P payment platforms have implemented a variety of strategies to protect users from potential scams. Some platforms provide comprehensive guidelines and educational resources about common scam tactics and how to avoid them. Some have sophisticated algorithms and artificial intelligence systems to identify and block suspicious activity, as well as dedicated security teams to investigate potential fraud.

Also, many P2P services offer some form of transaction dispute process, allowing users to report suspicious transactions and request a review. However, it’s important to note that while these measures can significantly reduce the risk of scams, they can’t eliminate it completely. That said, users must remain vigilant and exercise caution when using P2P payment platforms.

P2P payments are also protected under the Electronic Funds Transfer Act, which outlines consumers’ rights to dispute and be recompensed for unauthorized transactions.

Are P2P payments fast?

P2P payments can take anywhere from a few seconds to several days to go through to a user’s bank account. Some P2P services send funds directly to another user’s bank account, while others require the receiver to make an additional transfer of funds from the app to their bank account or debit card. This additional transfer may take longer.

With Zelle, for instance, payments are relatively instant and deposit directly into the receiver’s bank account. But many other P2P apps charge a fee if you want to make an instant transfer from the app to a bank account or debit card. To avoid this fee, you’ll have to elect for a longer, standard transfer, which may take a few business days to complete.

Alternatives to P2P payments

  • Direct wire transfers. Wire transfers through a bank might be a good alternative for those looking to send large amounts of money quickly, as P2P services may limit how much users are allowed to send. Fees for wire transfers can be lofty, ranging up to $50. Additionally, foreign exchange fees apply to international wire transfers.
  • Writing a check. Checks are a traditional way to make a payment to a person or business. Consumers can purchase checks from their banks, but banks can charge a considerable price for check orders. Once a check is deposited, it can take several days to clear and for the funds to become available. Also, though checks serve as physical proof of payment, it doesn’t make them immune to scams.
  • Money orders. Like checks, money orders are a paper form of payment, except they’re paid in advance and aren’t tied to a bank account. You may be able to buy a money order from a post office or grocery store by paying for the amount you’d like to send plus fees. Upon receipt, the recipient can cash it in or deposit it to a bank account like a check but with the guarantee that it won’t bounce.
  • Online bill pay. Many banks and credit unions come with online bill pay services that make it easy to send bill payments, instead of paying bills through a P2P app. Users may be able to set up automatic payments and can view all bill payments online. But an online bill pay service can only be used to pay bills, not for sending money to friends or family.

Bottom line

As consumers spend more of their daily lives online, they can expect P2P services to become more widespread and banking to become more digital overall.

Fewer people carry cash and getting it can be inconvenient, says EPAM Systems’ Jimenez. “As we start using Venmo or Zelle or anything like that, you see other things kind of following suit. You become more likely to be using digital payments for what you never thought you’d be doing.”

P2P payments can add convenience to everyday transactions, like splitting a bill or sending some aid to a friend or relative. But with any digital financial services, there’s always the risk of being exposed to potential cybercrime. To stay safe, protect your login information and know who you’re sending money to, so the funds don’t end up in a scammer’s hands.