5 truths and a lie about P2P payments
How familiar are you with peer-to-peer payments (P2P)? From splitting a restaurant tab to sharing the cost of a group gift, P2P networks provide an alternative to cash and checks for informal payment transactions with friends and family. Companies like PayPal, Google Wallet, and Venmo are driving adoption with mobile-based payment apps that make it quick and easy to exchange money.
Because of the rapid fire growth of P2P, there are quite a bit of myths floating around about this new way to pay. Following are six statements about P2P, but only five are factual. Can you spot the lie?
- One P2P service has become so commonplace that consumers are using the name as a verb, as in “Just Venmo me” instead of, “Don’t forget to pay me back.”
- Only 15 percent of P2P users use the apps to transfer money to family members and friends overseas.
- P2P usage is higher in Africa than in the U.S.
- There are no limits on the amount of money you can transfer using a P2P service.
- While the P2P service Zelle was created by the nation’s top banks, neither PayPal nor Venmo are affiliated with banks.
- P2P services are not always free, and fees vary widely among the different apps.
So, what do you think? Which of these six statements is the lie?
The answer is number four. The amount of money you can transfer depends on the P2P service you use. Google Wallet, for example, allows up to $10,000 per day, while Venmo has a rolling weekly limit of $2,999.99.
If you’re curious about the other five statements, here’s a rundown:
- Like Google, Venmo has indeed become a verb.
- It’s true. According to the Nielson Report, less than 20 percent of P2P users transfer money to family members and friends in other countries.
- Yep, this is also true. BI Intelligence reports that 92 percent of Kenyans say they have used P2P.
- Over 30 U.S. banks support Zelle, the P2P formerly known as ClearXchange. Although PayPal and Venmo aren’t affiliated with banks, they do act as wallets allowing users to store funds to send or transfer to their bank account.
- To see how the fees vary between the most popular P2P services, view this chart.
While easy, quick and convenient, keep in mind that P2P payments are not subject to the same regulations that protect traditional banking activities. So it’s advisable to only use P2P apps to send to (and receive money from) people you know. To learn more about P2P, contact Vantiv.