What are P2P payments?

Peer-to-peer (P2P) payments are a popular way to send and receive money. In fact, nearly 160 million people used mobile P2P payments in 2023 — and that number is expected to rise to more than 170 million in 2024.¹

Convenient, fast, and easy, P2P payments allow individuals to send and receive funds in minutes among friends, family, acquaintances, and even for goods and services. This method bypasses the need for cash or physical cards, making it easy to split bills, send gifts, or repay money.

In this guide, discover how peer-to-peer transfers work and ways they can help make sending and receiving payments hassle free.

How do P2P payments work?

Here’s how P2P payments generally work:

1. Choose a P2P payment service: Download and create an account for a P2P payment service or platform. Some mobile banking apps may also offer P2P payments.
2. Link a funding source: To send and receive money, individuals must link a bank account, debit card, or credit card.
3. Add recipient and initiate payment: To send money, add the recipient's information, such as their username, phone number, or email address associated with their P2P account. If available, users can scan a recipient’s QR code to populate their information as well. Specify the amount of money you want to send and confirm the transaction. Be sure to verify the person the money is being sent to is legitimate and be wary of any potential scams.
4. Complete transaction: The P2P payment service will deduct the specified amount from the linked funding source and transfer it to the recipient's account.
5. Get funds: If the recipient wants to transfer the funds to their bank account, they can initiate a withdrawal from the P2P service to their linked bank account. This may take a few business days to complete, though same-day transfers to a bank account may be available for a fee. Alternatively, individuals can choose to keep their balance in the app and use it for other payments. For example, users could leave their funds in their PayPal account and then use those funds to check out with PayPal.

P2P payment platforms

P2P payment platforms facilitate the transfer of money from one individual to another, typically through a mobile app or a website. These services act as intermediaries, making it quick, convenient, and secure to move money between people.