As money becomes increasingly digital, peer-to-peer (P2P) payments — think Venmo, Zelle and PayPal — are in demand. These services are convenient as long as you are smart about how you use them.  

Let’s take a closer look at how you can make P2P work for you. 

Benefits of P2P 

No more nagging friends to pay you back when you foot the lunch bill or cover the cost of a group gift. With P2P, you can send a direct request for your money.  

Additional benefits:  

• You don’t have to carry cash. 
• You can make transactions from your phone. 
• It’s simple, even for the tech-averse; all you need is an email or U.S. mobile number. 
• The money is usually at your fingertips immediately. 

Things to consider before initiating a P2P payment: 

•   Some providers charge fees — 2% or 3% to process payments drawn from a credit or debit card, for example — for other payment methods. Know the terms up front so you’re not surprised.  
•   Most payments are transferred quickly, but there can be a one-to-three-day wait. If you’re depending on that money to pay your bills, you may want to rethink how you receive that money.  
•   Only send and receive money from people you know and trust. 
•   When sending money, check and double-check your contact info before you tap “send.” The option to dispute P2P payments is often limited. If you make a mistake, you might not get that money back. 

Keep P2P Balances Low 

If you use P2P frequently – or preload money in apps like Starbucks or Crumbl – you might be tempted to keep larger account balances, so you’re covered anytime you need to make a purchase. Give careful thought to how high you load your account.  

With the exception of Zelle, where money is sent directly from a user’s bank account to a user’s bank account (and thus protected through your respective financial institutions), keep these factors in mind when using other P2P platforms: 

•   Your money in P2P accounts is not insured. Although it’s rare something would happen, if it does, your money may be gone permanently. Your money in a financial institution is federally insured up to $250,000. (breathes a sigh of relief.) 
•   You can’t earn interest with your P2P account. Interest is free money. Know where your money earns interest? In an account at a financial institution. 
•   You could forget where you’re carrying balances. If you haven’t used a payment app in a while or use multiple apps, it’s possible you’ve forgotten a chunk of change somewhere. Move it to a savings account or money market and make that money grow.    

Did you know UW Credit Union offers a P2P service with Zelle? Money can be sent between members and non-members.  It’s fast, safe and free1 to send money to people you know and trust. 

UW Credit Union believes in empowering individuals to control their finances through ongoing learning. Whether it’s your first bank account or your fifth, we’re Here for Every You. 

Candice Wagener is senior content writer for the UW Credit Union.  

Zelle and the Zelle related marks are wholly owned by Early Warning Services, LLC and are used herein under license.  

1U.S. checking or savings account required to use Zelle. Transactions between enrolled consumers typically occur in minutes and generally do not incur transaction fees.