More about Peer-to-peer transfers

The popularity of digital payment apps like PayPal, Venmo and Zelle is on the rise. These services make it easy for people to transfer money to each other – such as splitting the bill after dinner or paying back a friend.

They also offer a convenient way to pay for goods and services while keeping your account details private. But why are people drawn to these P2P transfers?

1. Convenience

One of the most appealing aspects of P2P transfers is how convenient they are to use. With mobile apps like Venmo, Zelle and Cash App, money can be sent with the click of a button from one person’s account to another’s. This makes splitting a dinner tab or paying a friend for services a breeze.

To initiate a transfer, users simply enter the recipient’s name and the dollar amount they wish to send, and then hit submit. Some platforms require additional security measures, such as a verification code that gets texted to the recipient, before a payment can be submitted.

Another major benefit of P2P payments is that they often come with low transfer fees compared to traditional methods. Banks and other traditional money transfer services charge a hefty 5% or more to process international wire transfers. P2P service applications and cryptocurrencies cut this to 0.5% or less. This alone can save you a lot of money over time.

2. Speed

Whether you’re splitting the bill at dinner or sending money to a friend who’s in need, it’s important that your funds arrive quickly and without any fees. Thankfully, peer-to-peer payments can be processed relatively quickly, especially if both parties use the same platform.

P2P payment platforms typically allow users to transfer money instantly or within one to three days. This is a stark contrast to traditional payment methods like checks, which can take several days to clear, and international wire transfers, which usually require an additional step (and higher fees).

Peer-to-peer transfer services are fast, convenient, and offer great value for consumers. However, it’s essential to know which providers to trust when making your next P2P transaction. NerdWallet writers are subject matter experts who use primary, trustworthy sources to inform their work, including government websites, academic research and industry interviews. We adhere to strict standards of journalism and fact-check our work to ensure accuracy. Read our Editorial Guidelines.

3. Anonymity

Many people want to hide their online behavior and communications content from hackers, criminals and other snoopers. Although it is difficult to completely erase all digital traces of one’s behavior, there are several tools that can help keep the user anonymous and untraceable online.

P2P transactions, especially those conducted through digital cryptocurrencies, provide the highest level of anonymity. They are a good way to transfer money between friends or family members without any intermediaries.

The technology behind P2P networks is based on the concept of equal peer computers simultaneously functioning as both “clients” and “servers” to each other. This arrangement makes the network highly robust and scalable as the number of users increases. It also enables the distribution of large files across the network quickly. The negative side of anonymity is that if a person makes a mistake when sending funds, there is no middleman in place to refund the money. This can be an inconvenience in some situations.

4. Security

When it comes to transferring funds online, P2P payments are one of the most popular methods for consumers. They are simple to use and can be securely sent with a few clicks. However, they are not without security risks.

Many P2P payment apps require users to register by providing details such as their name, email address and phone number. This information is used to ensure that the person behind the account is who they say they are. In addition, companies such as PayPal and Zelle offer added layers of security by requiring users to fulfil KYC (know your customer) requirements, which include proof of identity.

While these P2P systems are easy to use, it’s important to know when to and how to use them to avoid potential problems. P2P payments can be vulnerable to scams and can be difficult to get back if something goes wrong. Consumer Reports explains why you should only send money through P2P systems to people you trust.