[P2P] Send and Receive Money Online

Category: Finance

There are many occasions when people need to exchange small sums of money: a group dinner, after-work happy hour, a shared taxi ride or a “friends and family” phone account. Typically, cash is used to settle debts like these, but there is always that one guy who forgot his wallet and says, “I’ll have to owe you.” That's where person-to-person payment systems come in very handy. Here's what you need to know...

P2P Payment Options

Every parent has received at least one desperate phone call from a child who needs money immediately for a car repair, unexpected college fees and books, medical expenses, and so on. A check in the mail is too slow, and Western Union is too expensive. Even online banking transfers can take a couple days to clear.

Person-to-person (P2P) payment systems have evolved to address these and similar circumstances. Only a few years ago, Paypal’s “friends and family” payment option had the P2P payment sector all to itself, but now the field is crowded. Read on to learn about some of the most popular and consumer-friendly P2P payment systems.

PAYPAL FRIENDS & FAMILY is by far the most widely known and used P2P payment system. More than 180 million people have a Paypal account, so it is usually the first option suggested and used. When you send money to someone using the “friends and family” option no fees are deducted; the recipient receives the full amount sent.

Send money electronically

Paypal can be used via the Web or mobile apps for iOS and Android. The recipient’s email address or phone number serve as the address to which money is sent. All funds go into the recipient’s Paypal account instantly. Money can be spent or withdrawn as cash using a Paypal MasterCard debit card. If the recipient doesn’t have such a card, it may take 1-5 business days to transfer funds from a Paypal account to a bank account.


SQUARE CASH - differs from Paypal in that funds are transferred directly from bank account to bank account. Both parties must register a debit card issued by a U. S. bank; funds are transferred to and from the checking accounts linked to the cards.

A Square Cash payment may be available to spend in a matter of days or seconds. The clearing time depends on the policies of the recipient’s bank and how many times two parties have exchanged money via Square Cash.

Unlike Paypal, Square Cash cannot use a credit card as a source of funds. Also, prepaid debit cards are verboten. Also like Paypal, Square Cash can use phone numbers, email addresses, or a "cash tag" to identify senders and recipients. There is no charge to either party for use of Square Cash.


VENMO has seen explosive growth since its founding in 2009. It has become so popular with Millennials that “venmo me” is a common phrase among them. In 2012, Venmo was acquired for $26.2 million by e-commerce payments processor Braintree. The following year, Paypal bought both Braintree and Venmo, at costs of $800 million and $300 million, respectively.

Like Paypal, Venmo has a middleman account through which money flows. Also like Paypal, Venmo can use multiple sources of funds. There is no charge to send money using your Venmo balance, bank account, or debit card. A 3% fee applies if a credit card is used.

The most startling thing about Venmo is its “social” aspect. When users log in, the first thing they see is a Twitter-like timeline of transactions between other Venmo users - including many they don’t know. The amounts exchanged and personally identifying information are omitted, but it’s a bit crazy to see who is paying who in real time. You can make your transactions private, but most users never change the default settings of Venmo or any other app.


Zelle - Zelle is a payment service offered by many banks and credit unions. You can use it to send money to almost anyone with a bank account in the USA. Just a few of the participating financial institutions are Ally, Bank of America, Capital One, Chase, CitiBank, KeyBank, M&T, PNC, Regions, TD Bank, USAA and Wells Fargo. Zelle says that 85 million Americans already have access to Zelle through their bank's website or mobile app. If your bank or credit union doesn't offer Zelle yet, download the Zelle app from Google Play or the Apple app store to get started. After enrolling, you can send money using the recipient's email address or mobile number. Within minutes, the money will go directly into the recipient's bank account, if they are already a Zelle user. If not, they'll get a notification that explains how to receive the money.


FACEBOOK MESSENGER - Facebook knows everything else about you... so why not give them access to your bank account as well? You can use Facebook Messenger (on desktop or mobile) to send or receive money by linking a debit card (issued by a US bank) to your account. On this plus side, if you're already a Facebook user, you don't need to create a new account or download an app to send money with Messenger.

To send money, first open a Messenger chat with the recipient. Click the "$" icon and enter the amount you want to send. (On mobile devices, you may need to tap the "..." icon to find the "$" icon.) If this is the first time you're sending money, click Next to enter your debit card, then click Pay.

On the receiving end, open the conversation from the person who sent the money. Click Add Card to add your debit card to receive the money Your bank may take up to 3 business days to make the money available to you. Facebook does not charge a fee to send or receive money over Messenger.


Snapchat users in the USA can send and receive money with the Snapcash feature built into the Snapchat app. After linking a debit card to your account, you can send money to another Snapchat user. They'll also need to link a debit card to receive the funds. If funds are not claimed within 24 hours, the money is returned to the sender’s account.


Circle works like a texting app, and extends the ability to quickly send and receive money beyond borders and currencies. If you're sending money between currencies, you pay only the current exchange rate, with no additional fees.


Remember Google Wallet? It started as a way to pay for online purchases, but now it exists only as a P2P payment service. You can use Google Wallet to send money to someone using only their phone number. The recipient will need to link your funds to their Wallet if they're not already enrolled.


More than a dozen other P2P payment services are offered by everyone from household-name brands to obscure startups. Companies such as Dwolla and Popmoney are also struggling for a piece of the action.

Have you ever used an online person-to-person payment service? Your thoughts on this topic are welcome. Post your comment or question below...

 
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Most recent comments on "[P2P] Send and Receive Money Online"

Posted by:

Robert Henry
19 Jan 2018

Square Cash does allow credit cards yet they charge a fee. I was reluctant initially to provide them with a debit card so used credit card and it works fine. Any funds sent to me just stay on my Square Cash account, they do NOT go back to my credit card.


Posted by:

Walter
19 Jan 2018

Unfortunately, the PayPal "friends and family" service isn't free when you cross the US border, at least not any more. I'm in Canada, and I recently tried to donate some money to a US hobby group, using the Friends/Family option. It would have cost me several dollars to do this. (I sent them cash instead.)

People with Canadian bank accounts can use Interac e-Transfer to send money instantly, and I've used it a lot for buying and selling. There is a nominal flat fee for the sender (about $1.25?), but this is often waived if your bank balance is over a certain level.


Posted by:

JP
19 Jan 2018

MoneyGram is another low cost option. It's for both domestic and international transfers:

https://secure.moneygram.com/


A newcomer to the business of transferring money across borders is TransferWise.

https://transferwise.com/


Posted by:

TheDoug
19 Jan 2018

I would not be able to use any P2P service that insists on using bank debit cards. I do not own a debit card and never will; they are too risky in today's stolen identity world and can too easily lead to your checking account being drained. I only use credit cards, which are completely paid off each month so no interest is ever charged. That way I can review each charge and refuse to pay any that are not legit. The convenience of P2P does not overcome the risk involved if something goes wrong with the transaction. I do use PayPal, which I have linked only to a credit card for the above reasons.


Posted by:

RandiO
19 Jan 2018

Which would you recommend to use: An inkjet or a laser printer?


Posted by:

Jerrold Franklin
19 Jan 2018

My online bank (everbank.com) lets me send money, with no charge, to anybody. It can be a check mailed by the bank to the person's address, or a direct deposit to their bank account if they give me the routing number and their account number.


Posted by:

Peter B
19 Jan 2018

All UK bank accounts offer online banking, so you can send money to any other UK account (cheque or savings) that has a sort code and account number. Once you have set up a recipient, it's very easy to send subsequent funds.

The one drawback is that there is no checking of the account number you enter, so if you get a digit incorrect, then the money goes to a stranger, and it may not be simple to get it back.


Posted by:

RichF
19 Jan 2018

Chase Bank had Quick Pay for a long time and it was great. The receiving party would get an email saying they had money sent to them and they would have to just click to accept it. The money was usually available in your account within 24 hours. Now Chase uses Zelle and it seems that you no longer have to accept it. They send an email saying you got money and it's in your account. Haven't used it too much since the switch but the money transfer seems pretty instantaneous.


Posted by:

Karena
19 Jan 2018

After Chase Quick Pay there came ClearXchange - which did not require accepting the money - it just came. I did like this better. But, as RichF noted - now it's Zelle. Zelle has ridiculously poor reviews on Google Play, and if your bank doesn't use them (like mine) the ONLY WAY to use them is to download their app. No online access. I asked my tenants to start using PayPal instead - I have had no problems sending or receiving money with them.


Posted by:

Laurie
20 Jan 2018

For Apple Pay users, there is now Apple Pay Cash. Basic information: It accepts debit and prepaid cards that the user has already set up in Apple Pay. Payments can be sent via iMessage. There are no fees to send money. The minimum amount one can send is $10.00.


Posted by:

Chuck
20 Jan 2018

I spent a whole day trying to send cash from my bank account to my wife. Western Union and Moneygram both locked my account down immediately after creating it, I suppose since I forgot to be on VPN from Thailand where I live part time. If you don't have a debit card you may as well just give up. In a day where I can wave my phone at a box to pay for a meal, I still have to have a plastic card to act as an agent for my bank, REALLY? Stupid, stupid, stupid. My wife finally sold some stock she had to pay a bill.


Posted by:

marge201
22 Jan 2018

I've heard that if you use Paypal regularly for the same person that they'll start adding a fee, so better for me to use Google Wallet to pay my proofreader. My checking account to her checking account, I get the email confirmation within seconds, forward it to her, saves it in my taxes folder as a PDF, and it's a real pleasure. Venmo I'm pretty sure is only available via app. No thank you! I do money stuff at home on my desktop PC. Great article, Bob!


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