Imagine yourself in a dilemma like this: Your son, who just got out of college and now lives 10 hours away, needs money quickly to pay for emergency car repairs. Your solution? Make a person-to-person payment, giving him fast, easy access to the money he needs.
So what is a person-to-person payment? Sometimes referred to as a peer-to-peer payment or peer-to-peer transaction, a person-to-person payment is an online technology that allows customers of financial institutions to transfer funds from their accounts or credit cards to another individual’s account via the internet, using a computer, mobile phone, or tablet. Whether you’re looking to pay your roommate your share of the cable bill, get your landlord the rent payment before the start of the month, or reimburse your friend back for that dinner they spotted you, person-to-person payments can make these types of transactions a breeze.
And how do person-to-person payments work? Generally speaking, a person-to-person payment can be accomplished in one of two ways.
The first approach was pioneered by PayPal, a worldwide online payments system that supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders. Using this method, users establish secure online accounts with a trusted third-party vendor (such as PayPal or Venmo), designating their bank account or credit card information to be used to transfer and accept funds. The third party’s mobile application or website is then used to send or receive funds. Users typically are identified by their e-mail address and can conduct fund transfers with anyone who is a member of the third-party network.
With the second approach, customers use a mobile application or online interface developed or utilized by their financial institution to designate the amount of funds to be transferred. The recipient is typically identified by either their e-mail address or phone number. Once the transfer has been initiated by the sender, the recipient then receives a notification to use the online interface to input their bank account information to accept the transfer of funds. Recipients don’t need to have an account with the sender’s financial institution to receive the transferred funds.
Before using a person-to-person payment service, it’s a good idea to read all of the fine print associated with it. You should thoroughly review its terms of service to ensure you’re comfortable with the level of security provided by the service, how your personal information will be protected from a privacy standpoint, and any other types of rules, limitations, or liabilities associated with the service. At BankFive, we regard your privacy and security with the utmost importance, and we are absolutely committed to safeguarding any information that you share with us. You can access the terms and conditions associated with our person-to-person payment service here.
Before initiating or accepting a person-to-person payment, it’s also a good idea to consider: “Is there a fee to sign up? A fee to send money? A fee to receive money? Is there a single, fixed transaction fee for a service or is it calculated as a percentage of the transaction amount?” BankFive customers with eligible accounts who have registered for Online Banking can make person-to-person payments without any fees if they choose standard processing. At BankFive, expedited processing for person-to-person payments may incur additional charges.
So, say goodbye to the days of writing checks to friends and family, or scrambling to find cash at a moment’s notice, and say hello to person-to-person payments!