What Are Peer-to-Peer Payments?

Peer-to-peer payment services let you use a bank account or a credit or debit card to pay friends or family from your phone.

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Peer-to-peer payment systems — also known as P2P payments or money transfer apps, like Venmo, PayPal and Cash App — allow users to send one another money from their mobile devices through a linked bank account or card. They make splitting bills with friends and family painless.

Here’s what to know about how they work, how to choose a service and how to use them safely.

Already have an app in mind? Skip ahead to a few of our picks.

How P2P payments work

Say you’re out to dinner with your cousin Charlie and want to split the check. Instead of fumbling around for bills and coins, Charlie pays using his card. You take out your phone and open your app of choice, pick Charlie from your contact list, type the amount you want to send, and voilà — you've paid Charlie back. If you have a PIN set up, depending on the app you’re using, you’ll need to enter it to open the app or to complete the payment.

Once Charlie receives the money, he can leave it in his P2P account for the next time it’s his turn to pay, or he can transfer it to his bank account.

Different services may have different steps or requirements, but most work something like this.

» Want to explore your options? Find out how to send money to an individual

ZYNLO Bank logo
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Deposits are FDIC Insured

Zynlo Tomorrow Savings Account

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Min. balance for APY


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Deposits are FDIC Insured

One Save

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Comenity Direct logo
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Comenity Direct High Yield Savings Account

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Which one should you use?

Paying friends and family by phone or computer was first popularized by PayPal, and Google, Venmo (which is owned by PayPal) and others now offer similar services. P2P payments are also available through banks and credit unions, and on social media networks, including Facebook.

If you want to join the P2P club, it really comes down to which service your friends and family already use. That will make exchanging money more convenient.

But if you're the one making the choice, check out a few of our favorite payment services.


  • Great for mobile.

  • Social feed for payments.


  • Receive money in minutes.

  • Partners with banks and credit unions.

Google Pay

  • Receive money in minutes when you pay with a Google Pay balance.

  • Synchronizes with Gmail.


  • Wide reach.

  • More than 375 million active account holders worldwide.

Are P2P payments safe?

Though all of the major P2P systems encrypt, or shield, your financial information, some have been subjected to hacks and scams. But many apps have fraud monitoring and support teams to help resolve unauthorized transactions. Review a provider’s security procedures and fraud policies before signing up.

You can help P2P services keep your money safe by:

Many platforms let you create a PIN and require it to complete transactions. For even stronger protection, add one to get into your phone, too.

Some platforms do this automatically, but if yours doesn’t, check your settings for the option to get an email or text any time there’s a transaction on your account.

Don’t pay strangers with P2P. It can be tough to get your money back if you don’t get what you paid for.

The FDIC recommends linking a bank account or a credit or debit card when using peer-to-peer payment services. Why? If money is misdirected, you have rights under federal law to have the error resolved. If you use funds kept in the P2P account, you are subject to state laws and the provider’s own policies, which can vary.

How fast are P2P payments? What do they cost?

Keep these things in mind when you use peer-to-peer payments.

You have to wait for the money. Although transaction notifications are sent right away, the money itself may take one to three business days to arrive in your linked account if you choose to transfer it out of the app. Some providers are faster, and some also offer instant transfers for a fee.

Paying might cost you. Generally speaking, you can make P2P payments from a linked bank account or straight from the P2P account for free. But some providers charge fees — 2% or 3% to process payments drawn from a credit or debit card, for example — for other payment methods.

Enter data carefully. If you mistype a recipient’s email address, phone number or name, the money could go to the wrong person. Double-check your recipient’s information before you send a payment.

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