What Are the Differences Between Peer-to-Peer Payment Apps? What Are the Differences Between Peer-to-Peer Payment Apps?

When you're looking to split the bill at a restaurant or pay a friend back for something, peer-to-peer (or P2P for short) payment apps have become the go-to solution to quickly send money to close acquaintances. As P2P payment apps have grown in popularity in recent years, the number of services available to consumers has grown exponentially.  

Venmo, Zelle, and Cash App are a few of the more popular P2P apps available to consumers, but do they all do the same thing and how can you tell which app is right for you? Below, we'll dive into some of the specifics around what features some of the more prevalent P2P payment apps have so you'll know how to select the right option for your needs. 

What is a P2P Payment App?

A peer-to-peer payment app is an application that allows you to send and receive money to other people digitally and (usually) at no cost to you. P2P payment services allow you to send funds to contacts that you connect with on the app by using phone numbers you already have in your contact list, email addresses, or usernames specific to the app. The most common way P2P payment systems are used is by downloading an application to your smartphone and initiating transfers via your phone. Generally, when you set your account up with a payment app you'll connect it to a bank account that can be used to provide funds when transferring money to another party. This account can also be used to receive a deposit funds from the app after you receive a payment from someone else. While most peer-to-peer payment apps are free, some do assess charges for moving funds out of the app and into your bank account. Without further ado, let's get into some of the more popular payment app options available to consumers. 

Zelle

Zelle (which is what Leader Bank offers through our digital banking platform) is a mobile payment app that allows users to send money to other Zelle users either through the Zelle app or directly through their bank's digital banking platform. Once you've set up your Zelle account, you can start sending money to other Zelle users by simply entering their registered phone number or email address.

The benefits of Zelle are the instant transfer feature -- money is sent between users in a matter of minutes (if not faster) and that Zelle is used by a significant number of financial institutions (including Leader Bank), so if you are sending or receiving funds from another Zelle user, you'll never have to move funds in and out of a third-party app like with some other P2P services. There are also no services charges or fees associated with making transfers via Zelle. Any transfers with Zelle will be done directly from your bank account. Zelle has a smartphone app but can also be used through your financial institution’s online banking platform. Some of the drawbacks of Zelle are that you can't connect a credit card to pay your contacts like with some other apps, and that you can't transfer money to international bank accounts. Some financial institutions allow business transactions through Zelle, so be sure to check with your bank if that is a feature you’re interested in.

If you send money to the wrong person with Zelle, the company recommends contacting the recipient within minutes and explain the situation. If you aren’t able to get your money back, Zelle recommends contacting them directly at (225) 687-5940 for assistance.

Check out our website for more information on the benefits of Zelle as well as details on how to set up an account.

Venmo

Venmo is another payment app that allows users to send and receive money via a linked bank account. Venmo allows you to store a balance within the app which can be used to pay your acquaintances or can be transferred to your linked bank account. Unlike Zelle, Venmo allows users to connect a credit card which they can use to send funds as well. While Venmo is actually owned by another payment platform (PayPal), the two offer users different functionality. One notable difference is that Venmo offers users a free debit card that can be used to spend money at retailers from their stored Venmo balance. Users can also earn cash back at certain retailers using this debit card which is transferred directly to their Venmo balance.

Another benefit of Venmo is that it has already been adopted by millions of people, so it's likely that many of your contacts are already using Venmo. The drawbacks of Venmo primarily involve fees -- unlike Zelle, Venmo charges a 1.75% fee with a minimum of $0.25 and a maximum of $25 to instantly transfer funds from the app to your bank account (you can transfer funds for free with a delay of three business days). And if you plan to use your credit card to send funds via Venmo, you can expect to be charged a fee of 3% of the transfer total.

Payments on Venmo generally can’t be canceled once they’ve reached the recipient’s Venmo account, even if you accidentally paid the wrong person. If you sent a payment to someone you know by accident, you can send that person a charge request for the same amount so that they can pay you back, but Venmo does not require that the recipient return the funds to you. If you accidentally sent a payment to a stranger, Venmo recommends contacting their support team for assistance.

Venmo for Business allows merchants to set up an account and accept payments from customers through the Venmo app. Business owners can generate invoices and send payment requests with this functionality. Charges do apply, however, and can be found here.

Cash App

Cash App is another payment app that can be used to transfer money between peers. Cash App allows users to send money from a linked bank account, credit card, debit card, or their Cash App balance. Like Venmo, Cash App offers users a free debit card that can be used to spend money from a user’s account balance as well as earn savings at certain retailers. One unique feature that Cash App offers users is the ability to invest in stocks as well as trade in Bitcoin. Like Venmo, Cash App does charges users a 3% fee to send money from a credit card and 0.5%-1.75% fee with a $0.25 minimum to instantly transfer funds from the app to your bank account. If you don't mind waiting up to three business days, Cash App does offer free transfers from your Cash App balance to your linked bank account. 

Cash App can’t cancel or refund a payment after it has been completed. If you sent money to the wrong account, you will need to ask the recipient for a refund. You can learn more about what you can do if you transfer money to the wrong person by visiting Cash App’s website.

Cash App for Business can be used to process business transactions, and the app will automatically deduct a 2.75% processing fee on each payment a business owner receives.

PayPal

PayPal (which owns Venmo) is a payment option that allows users to send and receive money, in addition to serving as a payment method. Similarly to the services we've already covered, PayPal has a peer-to-peer payment functionality that allows users to send money from a linked bank account, debit card, or credit card. You can send a contact money by searching for their PayPal username, phone number, or email address in the app. As mentioned above, PayPal also offers the added functionality of serving as a payment method. Many online and even brick-and-mortar retailers have a PayPal option at checkout that allows you to pay for goods or services using the app.

Another benefit of PayPal is that the service has higher transfer limits than some of the options mentioned above -- users can send up to $60,000 per transaction depending on currency and whether your account is verified. PayPal also offers PayPal Credit, a credit line that can be used to send money to contacts. While PayPal does offer a variety of ways to transfer funds (debit card, credit card, PayPal balance, and PayPal Credit) the service does assess a 2.9% transaction fee for sending money with a debit card, credit card, or PayPal Credit. PayPal charges 1.75% of the transfer amount for instant transfers from your PayPal balance to your bank account. Free transfers can take from one to five business days, depending on your bank. 

If you send money to the wrong person on PayPal, you can cancel the payment if it’s unclaimed or request a refund by clicking “History” and “Details” next to the transaction.

PayPal also allows business transactions - meaning business owners can use the service to accept payments online including credit card transactions. Charges do apply and you can learn about them here.

Apple Cash

Apple Cash is an app available to anyone with an iPhone, iPad, or Apple Watch that allows users to securely send and receive money through their Messages or Wallet app. Anyone with one of the aforementioned Apple devices can link a debit card to their Wallet app which allows them to transfer money to their contacts who also use Apple Cash. Like PayPal and Google Pay, many retailers accept Apple payment at checkout, which is a quick, convenient, and secure way to pay for goods and services. One obvious drawback is that you'll only be able to transfer money to contacts who also have Apple devices. 

If you send money to the wrong person on Apple Cash you can cancel the payment if the recipient hasn’t accepted the payment yet, ask the recipient for a refund if they have accepted the payment, or contact Apple support for assistance.

Person-to-person payments with Apple Cash can’t be used for business-related activities like operating a business or paying employees. You can learn about fees associated with Apply Cash here.

Google Pay

Have an Android instead of an iPhone? Google Pay is a digital payment option available for both Android and Apple devices. With Google Pay, users can transfer money to one another and pay participating retailers for goods and services. To use Google Pay, you just need to download the app, sign in with your Google account, and link a payment method (like a bank account). One unique benefit of Google Pay is the ability to split costs like rent or a meal between users. A couple of notable drawbacks of Google Pay include that it is limited to the United States for the most part and it doesn't have the functionality to link a credit card as a payment method like some of the options outlined above. 

If you accidentally sent a payment to the wrong person using Google Pay you can dispute it using the Google Pay help form.

Google Pay for Business allows business transactions and provides transaction data to track stock levels and update product availability automatically. Businesses can use Google Pay for Business to receive payments more quickly, simply, and securely. You can learn about fees associated with Google Pay here.

How to Get Started with Zelle

As we mentioned above, Leader Bank offers our clients Zelle at absolutely no cost. Simply log in to your digital banking account and enroll in Bill Pay. Once your account is verified, return to Bill Pay and select the "Send Money with Zelle" tab. Just accept the terms and conditions, and enter your U.S. mobile number or email address as well as the deposit account you want to connect to Zelle. That's it, you're ready to start sending and receiving money with Zelle!

*All fees were current at time of original publication - please check relevant fees at time of use.