What are Peer-to-Peer Payments?

From Apple Cash to Zelle, Peer-to-peer payments are in a position to impact the way we exchange money dramatically, but many people still don’t know what they are! If you are one of those people, there’s no time to learn like the present — particularly as peer-to-peer payment popularity explodes. 

So, what are peer-to-peer payments? Say you’re out to dinner with a group of friends. Instead of scrambling to put together the right amount of cash so you can each cover your portion of the bill, paperless peer-to-peer payments simplify the process. With peer-to-peer payments, one person can cover the restaurant bill while everyone else pays them back through a peer-to-peer payment app. Much simpler! 

You can connect these apps to your financial account to conduct a peer-to-peer payment directly through your local credit union. So from now on, whenever you deal with a person or business with the same app, you can exchange cash in a breeze. 

Peer-to-peer payments

What Are Peer-to-Peer Payments?

Peer-to-peer payments, or P2P payments, are electronic money transfers made through peer-to-peer payment apps. You may already recognize the big names like Zelle, Venmo, and Google Pay, but more are on the rise. In the last few years, peer-to-peer payment apps have seen unprecedented growth. Allied Market Research projects the global industry will be valued at around $9.1 trillion in 2030, up nearly 500% from about $1.9 trillion in 2020. 

Why are peer-to-peer payments getting so popular? In a word, convenience. Peer-to-peer payments do away with all the hassles of paper money. Think about it. No more running to the ATM because you’re short. No more dealing with change. No more bulky wallets or coins lost in the couch. 

Even when some peer-to-peer payment apps charge subscription or transaction fees, they’re comparable to ATM fees, often less. Moreover, because of their lower banking fees, credit union peer-to-peer payments are often even cheaper.

Perhaps the biggest drawback is peer-to-peer payments require mass adoption — they only work if the business or person you want to do business with also uses the same app. However, the popularity of peer-to-peer payment apps is on the rise, so that problem will solve itself in time.  

How Peer-to-Peer Payments Work

Typically, the first step in peer-to-peer payments is to download the app. Then, during registration, you’ll connect the app to your financial account to seamlessly deposit and withdraw funds. Sometimes, you can join the app with a credit or debit card instead of a financial account. 

Additionally, some peer-to-peer payment apps work in conjunction with existing banking apps. So if you already have a banking app on your phone, you may already be able to use peer-to-peer payments without realizing it. 

Where your money actually is depends on the app. Some apps directly access your bank or credit union account, whereas others require funds set aside in the app itself, which serves as a digital wallet. 

You can transfer money by adding someone as a contact, usually by their email, phone number, or user handle. Alternatively, you can scan a QR code, a popular business method, so customers don’t have to register every store as a contact.  

The peer-to-peer payment app handles the actual transaction, deducting the appropriate amount from the giver’s account and moving it to the receiver’s account. Money exchanges are protected, legal, and (depending on the app) usually finished with a swipe.  

Different Peer-to-Peer Payment Apps

Here is a breakdown of some of the most widely used peer-to-peer payment apps now available: 



Founded in 2009, Venmo was one of the first peer-to-peer payment apps. It was initially designed for friends to split bills but has since evolved to include commercial transactions. PayPal purchased the platform in 2013, although they are still two separate platforms.



One of the earliest pioneers in online banking, PayPal now offers peer-to-peer payments through its mobile app. It has a widespread user base. The downside is the fees, which tend to cost more than other peer-to-peer payment apps. 



Zelle is another big name in peer-to-peer payment apps. It doesn’t charge users a transaction fee but makes money off the financial institutions. This makes it an attractive choice for customers, but the downside is that not all financial institutions participate. 


Google Pay

To create Google Pay, Google combined its peer-to-peer payments app with its in-store apps and online transactions system. As a result, Google Pay aims to streamline all of your payments to one singular app, taking advantage of Google’s considerable reach. 


Apple Cash

Pre-programmed into iPhones, Apple Cash is available through the Wallet application and works anywhere Apple Pay is accepted. Send and receive money either in the Wallet app or directly in Messages. The Apple Cash Family feature allows members of a family sharing group to send money to children under 18 who are within the group, and even track their spending. Apple Cash is only available on iOS devices. 


Cash App

Cash App may not be as popular as the other peer-to-peer payment apps, but it makes up for it with unique benefits. For example, Cash App offers a “Cash Card,” a debit card that allows users to spend their Cash App balance anywhere, regardless of whether the store is a member. Cash App also gives automatic discounts and works well with cryptocurrency, which makes it appealing to crypto users. 



Popmoney is known as one of the more inexpensive peer-to-peer payment apps. Its fees are minimal, and Popmoney moves funds directly in and out of your financial account. The drawback is that transfers take days to complete, so you’ll have to keep an eye on your activity. 

How Much Do Peer-to-Peer Payments Cost?

The costs associated with peer-to-peer payments depend on the app, but they’re usually negligible. Some apps that connect directly to your bank or credit union account can even be free, but not all. 

If you’re connecting to a credit or debit card, you can expect fees to be higher, perhaps a 2-3% fee for processing. Also, be sure to understand the fine print on how your payment method interacts with the app. For example, some credit card companies process peer-to-peer payments as loans, meaning they may charge you interest on the transaction. 

Are Peer-to-Peer Payments Safe?

With peer-to-peer payments, the technology and security are pretty safe. Like online banking, there’s little risk of hackers or digital attacks. The problem is that scammers and con artists can abuse the system for fraudulent payments. So in that sense, the safety of peer-to-peer payments is in the hands of the user. 

Consider whom you’re sending money to and why. Be wary of making payments to strangers, just as you would if you were using paper money. And don’t forget to review the transaction details before confirming them to make sure there isn’t any suspicious small print. 

It pays to review each app’s policy on handling disputes in case you’re worried about getting tricked. 

Are Peer-to-Peer Payments Fast?

In general, most peer-to-peer payment apps handle transactions quickly, within minutes. The apps that connect directly to financial accounts or use digital wallets are the fastest, with cash readily available from the start. However, transferring money outside of the app follows the average time for digital transfers, which is around one to three business days.

Further Resources on Peer-to-Peer Payments

Want to know more about peer-to-peer payments and how to use them safely? Check out these resources: 

Make Convenient Peer-to-Peer Payments Through Your Credit Union

Considering their intent to provide users with convenience, speed, security, and financial savings, peer-to-peer payment apps are poised to revolutionize how we do business. If you want to try one for yourself, review the options above to find the best app for you, and check with your credit union to see if they’re compatible. It could facilitate your very next purchase! 

And while you’re at it, remember that credit union peer-to-peer payments come with the benefits credit unions are known for — lower fees and higher savings rates. Find a credit union near you with our Credit Union Locator Tool.

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Did You Know?

Not-for-profit credit unions are run by those who use them, not a profit-focused board of directors as you’d find at conventional banks. In addition to keeping more of the money you deposit, thanks to their low fees, credit unions also tend to have better customer service and more personal relationships with their members.

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