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Peer-to-Peer Payment Apps

Jeffrey M Allen and Ashley Hallene


  • Peer-to-peer (P2P) payment system apps allow you to use a bank account or credit or debit card to pay from the app. They are sometimes referred to as money transfer apps.
  • P2P systems include PayPal, Venmo, Zelle, Google Pay, and Apple Pay.
  • Consumers need to use common sense and greater caution when using P2P systems to protect their financial assets.
Peer-to-Peer Payment Apps
Siri Stafford via Getty Images

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PayPal vs. Venmo vs. Zelle vs. Google Pay vs. Apple Pay . . . can you tell the difference? All these services fall under the definition of peer-to-peer (P2P) payment systems. In simple terms, a P2P payment system lets you use a bank account or credit or debit card to pay friends or family from the app. P2P payment systems are also sometimes referred to as money transfer apps. To start, let’s briefly review some of the top P2P payment systems in use today:

  • PayPal. PayPal is a payment service that can help users with personal money transfers, online purchases, and e-commerce. You can use PayPal as a peer-to-peer money transfer service, allowing you to send money to others via a linked bank account or a debit or credit card.
  • Venmo. Venmo is a mobile app for P2P money transfers with a social media twist. The app allows you to send or request money with emoji-embellished text messages that will show up in a Facebook-style feed. The app allows users to send money to each other via a linked bank account, existing Venmo balance, or credit card. This service is owned by PayPal, but it functions slightly differently. One distinction is that Venmo offers the option of a free debit card that allows users to spend money from their Venmo account balance.
  • Zelle. Zelle is a P2P money transfer service that you will find most commonly integrated with banks. Most major banks and credit unions are part of the Zelle network, and once you enroll, you just need an email address or phone number to send and receive money electronically. Unfortunately, the service does not work with international bank accounts; both the sender and the recipient will need a U.S.-based bank account to use this service.
  • Google Pay. Google Pay is a digital payment app that allows users to make purchases and money transfers with a digital wallet. You can download the app on Android or Apple devices for free. You can use it to send money to other users or to pay retailers for goods and services if the retailers have a point-of-sale near-field communication reader (i.e., in stores where you see a sign indicating “Google Pay is accepted”).
  • Apple Pay. Apple Pay (and Apple Cash) are digital services from Apple designed for making payments and sending money to friends and family. Apple users will find both in their Apple Wallet. The services are integrated into Apple’s Messages app. Apple Cash is used to send or receive money from others through the Messages app; you can also use it to send money to fund your Apple Pay account. If you have an Apple credit card, you can receive cash back from your card here. You can transfer your Apple cash balance to your bank account. Apple Pay lets the user make payments online, in apps, and in stores where Apple Pay is accepted. You can fund your Apple Pay account with a linked credit, debit, or prepaid card, or with the Apple Cash balance mentioned above.

Tip 1. PayPal Is the Most Accepted Service for Online Purchases

PayPal is integrated with the most online retailer checkout pages. It also has higher transfer limits than most of the other services out there. With PayPal, you can send up to $60,000, although you may be limited to $10,000 in a single transaction. The amount can vary depending on your currency and whether your account is verified. There are more than 400 million active PayPal accounts (compared to Venmo’s 40 million).

Tip 2. Use Common Sense with Social Money Transfers

In Venmo, the social posts that you submit with your money transfers show up in a feed that, depending on your privacy settings, can be public for anyone to see, visible to friends only, or kept private. As with all social media outlets, users should be mindful (and mature) about what they post. Case in point, a boyfriend sent his girlfriend money in Venmo and jokingly put “bj” in the note attached with the payment, though with a private setting enabled. The girlfriend is in a legal dispute with her ex-husband, who acquired the private Venmo data through discovery, then used the note during a jury trial to assert that girlfriend/ex-wife is a prostitute. (Yes, there are a lot of privacy/discovery/evidentiary issues here; just be mindful of what you write, even if you use a privacy setting.)

Tip 3. When Using Zelle, the Burden Is on You to Be Certain You Are Paying the Right Person

In the words of the New York Times,Fraud is Flourishing on Zelle.” Zelle was created in 2017 by some of the largest banks in the United States to enable instant digital money transfers. Unfortunately, its instantaneous nature makes it popular with fraudsters. Customers are finding themselves duped into sending payment via Zelle, and banks are claiming to be off the hook. The federal law covering electronic transfers (Regulation E) generally requires banks to cover “unauthorized” transactions. If you, as the user, initiate the transaction and send money to a phone number or email address, you have “authorized” the transaction. It’s a murky area that scammers are happy to exploit.

Tip 4. Good Samaritans Beware of This Venmo Scam

A North Carolina woman was working from home one day when she heard a knock at her door. A stranger stood there claiming he was locked out of his car and needed help. The woman loaned him her phone when he asked to text a sibling. The man then used the phone nearby and returned it to her. During the time he was using her phone, he used Venmo on her phone to send two charges totaling more than $1,000 from her bank account.

Tip 5. But Wait, There Are More Venmo Scams

We’re not trying to rag on Venmo, but even the company has a web page dedicated to common Venmo scams because they are so prevalent. Before using the service (or before the next time if you are already using it), check out their website.

Pay attention to the scam where someone pretends to be your friend and requests money. Scammers can change their username and profile picture to impersonate someone they see appear in your social feed. The scammer then targets individuals who have transacted with your friend in the past, such as yourself. If you get an unexpected request for money, double-check that it is your friend and not an imposter. You can always reach out to your friend (outside the app, via a phone call or text message) and verify that the request is legitimate.

None of this advice is intended for your use in business transactions, but rather to guide you or your loved ones when using these payment methods in your personal lives. With the convenience they offer comes a need to use greater caution to protect your financial assets. Different systems are popular with different generations, so it is important to be familiar with them and the precautions to be exercised with each. Happy spending!