Contactless P2P Payments
Contactless P2P (Peer-to-Peer) Payments are those transactions in which a person can transfer money to one another electronically. These transactions do not require visiting a bank or any physical contact.
This can be completed by using apps such as PayPal, Google Pay, and PhonePe. These P2P apps are widely used for splitting bills, paying friends and family, or making online or in-store transactions.
Working of P2P Payments
Sending money through P2P payment app is very simple and easy process, you can follow the steps given below to transfer the money:
- Download any P2P payment app or a mobile banking app and create your account.
- You need to set up your payment method, such as a bank account, debit card, or credit card.
- Fill in details of recipients such as phone number, email, username, or you can simply scan their QR code to find them. Double-check the recipient’s information to avoid any errors
- Type the amount, fill in your security PIN, and confirm the payment.
- The payment will be transferred to recipients instantly, or it sometimes takes up to two to three days.
Advantages of Contactless P2P payments
These P2P apps offer various benefits to their users. These are as follows:
- Instant Access to Money: P2P payments process transactions in real-time, which allows businesses to access funds immediately. This removes long settlement periods and also improves cash flow management.
- Simplified Record-Keeping: P2P apps maintain a transaction history, which can be helpful for budgeting and financial planning. Users can easily review their payment history anytime to track their expenses.
- Affordable Payment Solutions: It charges lower fees as compared to traditional banking methods. This helps in making these platforms a budget-friendly option for small businesses and freelancers.
Disadvantages of Contactless P2P Payments
These payments help to send money very easily, but they are not always safe. There are a few disadvantages which are given below:
- P2P Payments are not Regulated: P2P apps do not protect your money like banks do. If something goes wrong, your money might not be safe because it is not insured by the Federal Deposit Insurance Corporation (FDIC). In case your money gets stolen then it becomes harder to get your money back.
- Scams and Fraud: P2P payments transfer money instantly and cannot be reversed. Therefore, it sometimes causes scams and fraud. Scammers may trick users into sending money for fake goods or services, and once the money is transferred, it is often impossible to recover.
- Not Accepted Universally: Some P2P payment apps only work in certain countries. This means that one cannot use them to send money to people living in other countries. Businesses that have customers in different countries might have to use different payment options to make sure everyone can pay easily.
Common Examples of Peer-to-Peer Money Transfers
Given below are some of the common examples where P2P transfers are mostly used:
- Splitting bills among friends for meals, rent, or group expenses
- Sending money to family for gifts, emergencies, or regular support
- Collecting funds for group gifts, events, or fundraising
- Paying local service providers such as tutors, babysitters, or repair workers
- Sending money quickly during emergencies.
- Donating money to charities or crowdfunding campaigns instantly.
Popular Apps and Services for P2P Transaction
There are many apps that help in sending and receiving money through P2P payments. Here are some popular apps which are given below:
App Name | Features |
Paytm | It is useful forrecharges, bill payments, ticket bookings, and shopping through UPI and wallet options.This app iswidely used by small businesses. |
Google Pay | It allows you to send money directly from your bank accountusing UPI. You can pay for things, transfer money, or even pay bills. You can also earn rewards and cashback. |
PhonePe | It also allows users to make instant UPI payments, recharge mobile phones, and pay utility bills directly from their bank accounts.It supports wallets, debit/credit cards, and QR code scanning options for making transactions. |
BHIM UPI | It is developed by NPCI (National Payments Corporation of India). Throughthis app, one can directly linktheir bank accountwithout the need for a separate wallet. |
Amazon Pay | It allows users to make payments quickly by using saved cards, UPI, and Amazon Pay balance. It has the features of "Buy Now, Pay Later" and EMI options as well. It is beneficial for those who buy products frequently on Amazon. |
FAQs
- Are there any fees for P2P payments?
You can send money for free by using many P2P apps for personal use, but you might have to pay fees if you use a business account. So, it is important to check the fee details before transferring money.
- What safety measures are used in P2P payment apps?
The apps provide many safety features such as encryption, multi-factor and biometric authentication, activity alerts, and tokenization to protect your money and information.
- How much time will it take to transfer the money from the P2P app?
P2P payments are usually instant but sometimes it may take up to one to two days depending on the provider and transfer method.
- How do P2P services differ from traditional services?
Traditional services include third parties, such as banks. On the other hand, P2P services use technology to connect users directly, which helps in lowering costs and making the process quicker.
- Can I cancel a P2P payment after sending it?
No, you cannot cancel or reverse your payment once it has been completed.
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