In the US, around 84% of people use peer-to-peer (P2P) money transfer services—and the industry was valued at over $2.21 trillion in 2022. With so much money changing hands, it’s no surprise that security is top of mind for users and platforms alike.
P2P transfers offer speed, affordability, and accessibility, making them a popular option for sending money both locally and abroad. But understanding how they work—and how to choose the right service—is essential.
At Remitly, we aim to simplify the often confusing world of digital money transfers. In this guide, we will dive into the basics of P2P transfers, how they work, what to watch out for, and how to choose the right provider for your needs.
What does P2P mean?
P2P, short for “peer to peer,” refers to digital money transfers made directly between individuals—typically without going through a traditional bank or credit union.
Unlike wire transfers, which typically pass through multiple financial institutions, P2P payments are facilitated by digital platforms that allow users to send money straight to another person’s account.
There are two main types of P2P money transfers:
- Domestic P2P transfers: These involve sending money between individuals within the same country and currency.
Example: Paying your friend €20 for dinner using an app like Venmo or Zelle. - International P2P transfers: These are cross-border payments that often involve currency exchange.
Example: Sending $100 to family members overseas to help with household expenses.
How do P2P transfers work?
One of the biggest advantages of peer-to-peer (P2P) payments is their simplicity. Leading platforms offer intuitive apps and websites that make it easy to send money in just a few steps.
How P2P money transfers work:
- Create an account. Download your preferred app or visit the platform’s website. Add your personal information and verify your account via email.
- Link your payment method. Connect your bank account, debit card, or credit card following the prompts.
- Fund your digital wallet (optional). Some platforms let you store funds directly in the app, such as Venmo. This can be helpful if you’d rather not link a bank account for each transaction.
- Add your recipient. Enter the person’s name, email, phone number, or bank details—depending on the app.
- Confirm and send. Double-check the details, then complete the transfer.
The technology behind peer-to-peer payments
With digital mobile payment technology, P2P payments rely on encrypted digital wallets, mobile applications, and secure payment gateways. These systems implement advanced security measures, like two-factor authentication, to protect your data translations. We can break it down into the following four areas:
- Payment initiation and authorization: First, the request is transmitted using the internet. Then, the app or website confirms that it can pull the amount from your linked account or wallet. If there are insufficient funds, the P2P transfer will be automatically declined.
- Tokenization and encryption: These platforms won’t be sharing your personal banking details any time soon. Instead, they implement tokens and encrypted data packets to protect sensitive information.
- Settlement: To make a domestic payment, the app works with a processor to actually move the funds. This is done using networks like ACH (Automated Clearing House) or RTP (Real-Time Payments). Internationally, apps rely on SWIFT codes and partner networks.
- Delivery: The system then deposits the funds into the recipient’s chosen delivery method. They’ll get a notification either in the app or by email (or both).
Security and verification systems for P2P transfers
Most platforms require ID verification, especially for international transfers. You may also receive one-time codes by text or email to confirm your identity before sending money.
Identity verification is essential to peer-to-peer payments, so apps may ask you to upload scans of your passport or another form of ID—some even ask for a photo of you holding the ID or a payment method.
Alongside verification methods, platforms will often use biometrics and two-factor authentication (2FA) to confirm that only you can access your account. This is especially important when storing money in a digital wallet. Biometric systems confirm your identity through fingerprints, facial features, or voice recognition. 2FA relies on requiring two different metrics to log in, such as your password and a code they send to your phone or email.
These days, the best P2P payment apps are also using AI technology to improve fraud detection. AI will scan for anything out of the ordinary—from new devices attempting to log in to foreign IP addresses and suspiciously large transactions.
Delivery options for international transfers
When sending money abroad, many P2P services offer flexible delivery methods, such as:
- Bank deposits
- Cash pickup
- Mobile money accounts
These options allow recipients to access funds in the way that works best for them—whether they’re near a bank branch or in a remote area.
Popular P2P payment platforms
Domestic P2P services in the U.S.
For local transfers, apps like Venmo, Zelle, PayPal, and Cash App make it easy to send money quickly.
- Venmo is great for casual payments between friends and includes a social feed.
- Zelle transfers directly between U.S. bank accounts, often within minutes and with no fees.
- PayPal supports both domestic and international transfers, though fees may apply.
- Cash App is popular for its simplicity, plus features like investing and instant deposits.
These platforms work well for day-to-day transactions within the U.S., but international transfers call for a different approach.
International P2P services
For international transfers, platforms like Remitly are designed specifically to support cross-border payments. With our platform, you can send money to over 100 countries, with options like bank deposit, cash pickup, and mobile wallets—often with fast delivery and low fees.
P2P vs. wire transfers—the benefits
P2P money transfers offer a faster, more convenient alternative to traditional wire transfers. Here’s how they compare:
- Speed: While wire transfers can take several business days—especially for international payments—P2P transfers are often completed in minutes or hours.
- Convenience: P2P apps are built for ease. You can send money anytime from your smartphone without needing to visit a bank.
- Cost: Traditional wire transfers often come with higher fees and less transparent exchange rates. P2P platforms typically offer lower fees and upfront pricing.
- Accessibility: P2P services like Remitly allow recipients to choose how they want to receive money—whether by bank deposit, mobile wallet, or cash pickup.
That said, wire transfers may still be used for certain large transactions or when sending money to business accounts. But for most day-to-day and family-related transfers, P2P services are often the quicker and more flexible choice.
| Feature | Traditional Bank Transfers | P2P Transfers |
| Speed | 1–5 business days (domestic or international) | Often instant or within minutes |
| Cost | Higher fees, especially for international wires | Lower fees or no fees for many transactions |
| Process | Requires bank involvement, often manual | Fully digital, app-based |
| Availability | Business hours only | 24/7 access via mobile apps |
| User Experience | In-person or online, may be complex | User-friendly apps and interfaces |
| Best For | Large, formal, or business-related transfers | Everyday personal payments |
Potential drawbacks and limitations
We’ve given you several reasons why P2P can streamline your money transfer process, but since nothing is perfect, let’s review a few of its limitations:
- Transfer limits: Many P2P services cap daily or weekly amounts. If you’re sending large sums, you may need to split the payment across several days.
- Limited customer support: Unlike traditional banks, most P2P platforms don’t offer in-person service. Help is typically provided via chat or email, which may not resolve every issue quickly.
- Fraud risks: Once a P2P payment is sent, it’s often irreversible. To stay safe, only send money to people you trust and use secure, verified platforms.
- Country and currency restrictions: Not all P2P platforms support international transfers or certain currencies, which could delay your transaction or limit your options.
- Verification requirements: Due to financial regulations, you may be asked to provide ID or other documentation—especially for large or international transfers.
How to choose the right P2P service
Choosing the right platform depends on your needs and your recipient’s preferences. Here are a few key factors to consider:
- Domestic or international? Some apps specialize in local transfers, while others—like Remitly—are built for sending money abroad. You may need more than one service to cover both.
- Compare total costs. Look at both upfront fees and exchange rates. A “zero-fee” promise may hide markups elsewhere, so always check the final amount the recipient will receive.
- Think about delivery options. Does your recipient need a bank deposit, mobile wallet, or cash pickup? Make sure the service supports their preferred method.
- Check security features. Look for platforms that offer encryption, two-factor authentication, and verified user protections.
- Read reviews. Platforms like Trustpilot or the Better Business Bureau can give you insight into how reliable a service really is.
Tips for keeping your account and money secure
Keeping your money safe starts with a few key best practices when using P2P transfers:
- Double-check the recipient’s info before sending your money, and only send money to people you know.
- Take advantage of 2FA and biometrics if available.
- Use strong passwords and update them often.
- Keep records of your transactions (screenshots work great).
- Review your protection options with your chosen platform to know your rights.
- Report fraudulent or suspicious activity as soon as you notice it.
Start using P2P transfers with confidence
P2P money transfers offer a faster, more convenient, and often more affordable way to send money—whether you’re covering a local expense or supporting family abroad. And with just a few taps, you can send funds securely from anywhere, at any time.
To get the most out of these services, you should always choose a trusted, regulated provider. For international money transfers, platforms like Remitly offer reliable delivery, clear pricing, and multiple ways for your recipient to access funds.
Before you send, take time to compare your options based on where you’re sending money, how quickly it needs to arrive, and how your recipient prefers to receive it. The right service can make a big difference in both speed and savings.
Ready to get started? Try Remitly today for secure, affordable international transfers you can count on. For more tips on staying safe and informed, explore our guide on how to avoid common scams.
FAQs
What does P2P stand for in money transfers?
P2P is short for “peer-to-peer,” and these entirely digital money transfers consist of money being sent between two people, without the need for a traditional bank.
Are P2P money transfers safe?
Absolutely, as long as the platform is trusted and prioritizes security, P2P money transfers are very safe. Only use the best P2P payment apps that offer two-factor authentication, use high-level encryption, and constantly monitor fraud.
How long do P2P transfers take?
Depending on your chosen platform, peer-to-peer transfers can take anywhere from seconds to three business days.
What fees do P2P services charge?
Common fees include a flat rate per transfer, a small percentage of the transferred funds, or a credit card fee. There may be an additional charge to speed up the transfer as well. When done using a debit card or your bank account, the transfers are often completely free.
Can I cancel a P2P money transfer?
Once sent, peer-to-peer payments can’t be cancelled. In rare cases, you may be able to cancel if the email address you used doesn’t exist or the transfer is still pending collection.
What’s the difference between P2P and traditional wire transfers?
P2P transfers are typically faster and more affordable than traditional wire transfers. Because they don’t rely on multiple financial intermediaries, P2P payments can often be completed instantly through mobile apps. In contrast, wire transfers may take several days to process and often come with higher fees. While wire transfers are better suited for formal, high-value transactions, P2P is ideal for everyday payments.