You carry your smartphone with you everywhere you go.
Cashless payments are becoming part of our everyday spending habits. We pay bills online, and we carry credit and debit cards as our primary method of payment on-the-go. It’s no surprise that a mobile payment app (or multiple!) would become a regular part of our day-to-day technology use.
Payment apps have made it possible to extend our cash habits and capabilities to adapt to our more virtualized, digital-centric environments. When it comes to things like reimbursing a friend or splitting a tab, we have apps and services available to us now that are uniquely designed to handle the task.
Paying with apps has become exponentially more popular over the years, and along the way those services have come a long way when it comes to security, speed, and convenience.
When it comes to choosing the right apps for you, the answer depends heavily on both how you’re looking to send money and where you want those funds to go!
What does your “mobile wallet” look like?
Do you use mobile payment app services from your phone or tablet?
Here we take a look at some of the most prominent names in the P2P (“peer-to-peer”) mobile payment app space and evaluate which of those might be the best match for your needs and preferences.
Why Use A Mobile Payment App?
Before we dive in, we should recognize that cash is still alive and well!
That said, mobile apps give users the ability to stop worrying about whether they stopped at an ATM or if they have change lying around when they need it. Many of us now prefer to just skip cash and pay via a mobile tool of some sort.
There’s no fumbling around to find the right card to use if a store accepts mobile payments and you have an app for that.
Some of the mobile payment apps we’ll discuss here actually charge less fees per transaction than the fees you incur when you use your credit cards.
All of these services let you not only send money, but request money as well if someone should be paying you.
Another thing that many people actually really like about mobile payment apps is that the transactions are recorded, regardless of the amounts.
You can keep tabs on your spending activity discreetly and diligently in that way.
Oh, one more thing: Even though these apps are not FDIC insured, they are far more secure than you think!
If you lose or get one or more of your cards or your wallet stolen you don’t have to worry about these accounts. Some people find it scary to venture outside the perceived security of established banks, but as long as your phone is properly secured, your payment info is very safe and sound if you back those up with your bank account.
These services use virtual accounts to represent the account holder’s information, which shields the actual payment methods from the vulnerable lines where other payments methods might otherwise be exposing sensitive data if connection is not secure.
As with credit cards, you have a built-in buffer between the payment method and your assets, even though they work like cash and can be directly linked to your core banking accounts.
So, at the end of the day, using online financial services is not everyone’s preference… but by design mobile payment app transactions are simple, safe, and fast!
Please note that this information is specific to P2P recommendations and is not covering business use cases.
In addition, it should be noted that you must be 18 (or even 19 depending on your particular jurisdiction) to use these financial services for online payments. The legal contract age is required before an individual can enter into a binding legal agreement AKA a contract. Opening an account requires agreement with a binding legal contract.
Things To Look For In A Mobile Payment App
Before going through some of these popular options, let’s talk about how you might go about selecting the mobile payment app that’s specifically well-suited for your needs. Here are some considerations:
- Use Cases
Is it just between family and friends, or do you anticipate needing to pay people you don’t know? - Fees
Make sure to look past the fact that most of these have free sending and receiving. What are the costs for transferring balances? Do you need to be able to use credit? - International Use
If you have to use the service outside of the US you’re much more limited - Limits
Do you need to be able to surpass just a few hundred dollars per week in exchanges, or will this just be for a few dollars here and there? - Security
Does your preferred app feature extra security layers to keep things protected for you?
With all of this in mind, below are a number of options for your consideration.
The PayPal Family
PayPal
PayPal may not be the fastest mobile payment app, nor is it the cheapest; however, it boasts over 200 million active accounts world-wide. It’s been around for 20 years or so at this point!
In terms of growth, they’ve even expanded it into the loan and gift card space. Today we will stay focused on P2P and won’t be covering payment processing for sales transactions. PayPal was made to be business compatible and is well suited for small businesses…but that’s a story for another day.
Next to banks themselves, PayPal is a clear leader in P2P payments.
Pros
- No fees per P2P transaction
- Send requests for payment
- Transactions possible by both mobile and desktop
- High transfer limit: $10K per transaction, no limit per send as long as account is verified
- Free standard transfer to verified checking account – takes 1-3 business days
- Instant transfers are available (for a fee – see “cons”)
- Shareable link for personal transactions via “paypal.me”
- Find a recipient with just their email address or phone number
- Agnostic: No specific financial institutions or OS tied to this service
- Ability to reverse any unclaimed payments
- Customer service is highly reputable
- Cash Card linked to PayPal balance available to use like debit card (with limits)
- Those enlisted in PayPal Cash are eligible for direct deposit and bill pay functions
- Two-factor authentication is available and encryption is used to secure account
Cons
- 1% of amount, max of $10, charged for instant transfer (requires eligible linked checking or debit)
- 2.9% fee charged if funding account with credit, debit card, or PayPal Credit, plus fixed fee based on currency of the transaction (varies by country)
*This is listed as a “con”, but we think it’s still a good deal for P2P services! - Additional fees for sending outside of the US is at least 5% of amount, plus a fixed fee depending on receiver’s country of residence
- Both sender and recipient must have a PayPal account in order to complete a P2P transaction.
*To verify account you provide info like last 4 digits of your SSN, birth date, and ZIP - Free standard withdrawal from your PayPal account takes 1-3 business days
Venmo
You may not realize this, but PayPal actually acquired Venmo back in 2014 as part of a bigger acquisition of a parent company. So, it’s part of the PayPal “family”.
It’s the #1 P2P mobile payment app among the younger generations, specifically. That is no surprise once you get a look at its social network vibe. It is a big hit with emoji enthusiasts. Venmo is intended as a mobile-first service, meaning that it is best when used via a mobile device.
Users love Venmo so much they made it into a verb!
“Hey, don’t worry about it. Just Venmo me later.”
Pros
- Once you verify your account you can send up to $2,999.99 per week
*Before verifying the limit is $299.99 - Send requests for payment
- Once you verify your account you can transfer up to $19,999 per week to your bank account
*Before verifying the limit is $999.99 - No fees per P2P transaction
- Free standard transfer to verified checking or debit – takes 1-3 business days
- Instant transfers are available (for a fee – see “cons”)
- Name, handle, phone number or email can be used to find recipients
- Shareable Venmo QR code that can be sent to connect others to you
- Social “feeds” and the ability to comment or “like” transactions
- (Visibility of transfers are optional, to note)
- Agnostic: No specific financial institutions or OS tied to this service
- Cash card linked to Venmo balance available to use like debit card (with limits)
- Two-factor authentication is available, and encryption is used, for security
Cons
- Can only send or receive via mobile.
You can view account activity on the website, but you can’t carry out transactions. - Instant transfers are subject to 1%* fee with a minimum of $0.25 and max of $10. “Instant” transfer occurs within 30 minutes.
- 3% fee per transaction for sending funds using credit
- To verify account and secure higher limits for transactions you have to provide info like last 4 digits of your SSN, birth date, and ZIP
- Only using US mobile numbers and US bank accounts
- No direct deposit or bill pay services available for Venmo accounts
- Both participants involved in transaction must be registered with Venmo
- There are no reverses/cancellations of payments
What is Xoom?
This is another PayPal-owned company. Xoom is designed for users in the US to pay recipients in other countries. It cannot actually be used for fund transfers between people within the US. Just clarifying!
Cash App
Cash App, formerly known as Square Cash, comes from the popular point-of-sale system Square. As with the other services, it adds to or withdraws money from your app balance (or one of your accounts if app balance is null).
Cash App is a simple P2P app with seemingly fewer fees, and it is Bitcoin-friendly; however, see below for the finer print to decide whether it is right for you.
Pros
- No fees per P2P transaction
- Send requests for payment
- Sending via browser is available using recipient’s “$cashtag” URL.
- Within app you can find recipient by name, “$cashtag” handle, or phone number
*Option to discover nearby users with Bluetooth (optional) - Free standard transfer to verified checking or debit – takes 1-3 business days
- Instant transfers are available (for a fee – see “cons”)
- Send up to $2,500 in a 7-day period with a verified account
- No limit to amount you can receive in a 30-day period once your account is verified
- Ability to buy and sell Bitcoin directly from Cash App balance, use Bitcoin for transactions
- Purchase, sell, and manage your stock portfolio via Cash App Investing (subject to taxes of course)
- Supports international transfers
- Cash Card linked to balance available to use like debit card (with limits)
*Cash Card can also be set up to use with Apple Pay and Google Pay! - Direct deposit available
- “Cash Boost” instant cash back program available with use of Cash Card
- Agnostic: No specific financial institutions or OS tied to this service
- Two-factor authentication is available and customer details are encrypted to secure account
Cons
- 1.5% fee (min fee $0.25) for instant transfer to a bank account
- 3% fee per transaction for sending funds using credit
- Send max of $299.99 within any 7-day period unless/until account is verified
- Receiving max of $999.99 within any 30-day period unless/until account is verified
- To verify account and lift limits for transactions you have to provide personal identifying info
- Only using US mobile numbers and US bank accounts
- Payments are instant and permanent
Zelle
To use Zelle you’ll be required to directly link your bank or credit union account. Many financial institutions now actually offer Zelle within their banking app, so you may not even need to work out of a separate app to reap the benefits. As a result of that, keep in mind that security factors will be contingent on the bank or credit union’s specific app requirements and features.
Pros
- No fees per P2P transaction
- Send requests for payment
- Funds are received within minutes since accounts are strictly used with banking information
*On that note, there is no place for funds to be held in your Zelle account like other services - Built into many banking and credit union mobile apps you already use
- Sending limits are set by your bank or credit union; otherwise, the weekly send limit is $500
- No limit on what you can receive using Zelle
- Find a recipient with just their email address or phone number
- No specific OS is tied to the service
Cons
- Both parties must be enrolled with Zelle to send and receive funds
*By nature of Zelle, recipients must have valid bank account in the US
*If you send to unenrolled recipient, funds are held until they enroll. Payment can be canceled if recipient has yet to enroll.
After 14 days the funds you sent will be returned if recipient does not enroll - Similar level of risk as other online mobile app payment services in that it does not offer a protection program for payments
- No ability to link credit or debit cards – limited to purely bank account to bank account transfers
Google Pay
Google Pay Cash combines what was known as Google Wallet and Android Pay previously. It more recently added P2P as a sub-service. This write-up is specific to the P2P capabilities of Google Pay.
Pros
- No fees per P2P transaction
- Send requests for payment
- Transactions possible by both mobile and desktop
- Agnostic: No specific financial institutions or OS tied to this service, even though this is from Google!
- High limits: $10K per transaction; up to $10K within 7 days
**Florida residents are limited to $3,000 every 24 hours - Free standard transfer to debit or bank account
- Find a recipient with just their email address or phone number
- Ability to reverse any unclaimed payments (recipients must have Google Pay to claim a payment)
- Component of Google Pay digital wallet with NFC (near-field communications) functionality via smartphone
- Direct deposit into bank account or to debit, capable via default destination setting for receipt of funds; otherwise, funds remain in Google Pay account
- Two-factor authentication is available and encryption is used to secure account; normal phone unlock methods incorporated into methods for authentication
- Integration with Google services
Example 1: Request or send funds using toolbar within Gmail, or separate app is available
Example 2: Tell your Google Home device to send money to one of your contacts
Example 3: Pay with your Android Wear watch if it is compatible - Direct debit available for Google services
- Standalone app can also serve as e-wallet for loyalty and gift cards, tickets, etc
- Ability to reverse any unclaimed payments
Cons
- Must be linked to valid bank account to claim more than $2500
- 2.9% fee per transaction if using credit
- To upload payment options, it requires multiple points of personal identifying information
- Depending on your bank, “instant” transfer to bank may take up to 4 business days
- Only using US mobile numbers and US bank accounts
Apple Pay
Apple Pay Cash is Apple’s native mobile payment service. This is well-integrated with iOS as you’d expect.
Pros
- No fees for P2P transactions funded by debit, bank account, or Apple Pay
- Accepted by many stores as of December 2019
- Send requests for payment
- High transfer limit: $10K per transaction, no limit per send as long as account is verified
- Transfer up to $20,000 per week to debit or bank account
- Instant transfers available to eligible Visa debit cards; otherwise, funds remain in Apple Pay account until transfer is initiated
- Free standard transfer to verified bank account – takes 1-3 business days
- Apple Card available – Daily cash back program with use
- Ability to cancel a unclaimed payments (recipients must have Apple Pay to claim a payment)
- Component of Apple Pay digital wallet with NFC (near-field communications) functionality via smartphone
- Two-factor authentication is available and encryption is used to secure account; normal phone unlock methods incorporated into methods for authentication
- Standalone app erves as e-wallet for loyalty and gift cards, tickets, etc
- So long as you have it set up with a credit or debit card, you can send or request funds right through Apple’s native Messages app, or via your Apple Watch
Cons
- Only compatible with iOS
- 1% fee (min fee $0.25, max $10) for “instant” transfer to bank – may take up to 30 minutes
- No download needed for iOS – it comes as a native app
- No desktop interface
- 3% fee if using credit card or Apple Card
Samsung Pay
Just like Apple Pay being iOS-only, Samsung Pay is not compatible with non-Samsung devices.
This coverage is specific to Samsung Pay Cash. With Samsung Pay, limitations of sending and receiving are set by banks and vendors rather than Samsung.
Pros
- No fees for P2P transactions
- MST (magnetic secure transmission) technology is available with Samsung that works like card swiping and doesn’t require NFC-based terminals; no physical card needed as a result!
- Direct deposit available
- Samsung Pay Cash has 2 types of accounts:
– Lite accounts allow 1x receiving or loading of money as a trial of the service
–> Daily: Up to 8 transactions, max total not to exceed $500
–> Wkly: Up to 10 transactions, max total not to exceed $500
–> Monthly: Up to 15 transactions, max total not to exceed $500
– Full accounts allow multiple times receipt or loading once your account is validated
–> Daily: Up to 8 transactions, max total not to exceed $1500
–> Wkly: Up to 10 transactions, max total not to exceed $2500
–> Monthly: Up to 15 transactions, max total not to exceed $3500 - International money transfers available via Travelex
- Ability to cancel unclaimed payments
- Two-factor authentication available and encryption used to secure account; normal phone unlock methods incorporated into methods for authentication
Cons
- Account is pre-paid only
- Only compatible with Samsung devices
- No desktop interface
This piece was focused on peer-to-peer transfers. Let us know if you’d like a follow-up post addressing business use cases of these and other services!
In the meantime, get in touch with us to learn more about how we’re helping business owners manage and strategically plan technology for their organization.
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