Technically, every payment can be considered a peer-to-peer transaction. Since one party will be transferring money to another, it’s easy to make this generalized distinction. But in financial circles, P2P transfer refers to the ability to directly transfer funds from one account to another in many different contexts. The digital boom is mainly responsible for the surge in P2P popularity because people have found it more convenient to directly interact with each other through digital platforms, especially when you take into account social media platforms. Here’s a brief overview of the reasons that make P2P money apps more popular than ever. (Image Credit: Mohamed Hassan/ Pixabay)
What Are P2P Apps?
The traditional way of going down to the nearest branch of your bank to transfer money to a friend or a business has become almost obsolete, except for big and official payments. A P2P app utilizes a bank’s network by creating a parallel system in the digital world that allows money transfers to happen easily within a few taps. Whether you’re splitting a pizza with a few friends or paying rent, using a P2P app can make it quite easy for you to get those funds exactly where you need them without wasting any time or getting dragged into bureaucracy.
A P2P app uses a digital financial platform that allows users to connect their debit or credit cards to directly transfer funds through them. Some apps have their own wallets to facilitate the transfer process by concentrating on validating the transfer in one step. Apps like Square Cash are even implementing special features that allow you to use a P2P platform to make cryptocurrency-based transactions. You can read more about Square Cash online to get an idea of the broad range of functionality modern P2P money apps have to offer. While classic money transfer services worked by acting as middlemen, P2P apps make the process faster by giving more control to the users.
Cross-Border Functionality
A lot of P2P apps and platforms are gaining more popularity with the recent removal of many restrictions that come with cross-border payments. International money transfer has always been time-consuming because of the lengthy process that classic money transfer services required. Even if you remove the time factor, it’s actually becoming cheaper to use P2P apps for international transfers compared to conventional methods. Innovative technological advancements ensured that security is no longer an issue when it comes to cross-border financial transactions.
Utilization in Forex
P2P money apps have more utility than just paying for something; they can be used in investments as well. International exchange rates in foreign currency exchange markets are known to zap the return from an investment. P2P apps allow users in forex to negate the need to resort to middlemen who take very high fees to transfer international funds. Clients are no longer under the mercy of brokers thanks to P2P platforms.
P2P Lending
Another popular solution made available through P2P apps and platforms is the ability to repay loans at more convenient interest rates. This can provide relief to a lot of users who are forced to visit a bank to repay their loan, not to mention wasting funds on unnecessarily high interest rates. A lot of banks and lending institutions are utilizing this concept to create new profitable loan plans. Peer-to-peer lending also helps borrowers find better interest rates and get the funds within one business day. Using P2P apps to pool money from multiple sources is also quite convenient for repaying large loans.
Compliance and Security
One of the main issues that used to plague the Fintech sector was their vulnerability to problems related to governmental regulation, compliance, and security. Fortunately, the progress of technology in such a field helped set standardized processes that ensure the security and legality of transactions. For P2P apps to be accepted, they undergo rigorous inspections and tests on both the technical and legal levels. Pioneers of the industry know that such platforms are built upon trust and transparency, making them of paramount importance in the further development of such apps if they want to succeed.
Transaction Notifications and Updates
P2P money apps utilize the opportunities presented by smart technology to ensure that users are on top of all their transactions. Getting live push notifications that provide you with information on your transactions once they happen is quite useful. Real-time updates on the user’s wallet or account allow the user to notice if there is anything amiss or keep track of their finances. It can also be designed to provide the user with reminders and automatic payment schedules.
Industry giants like Visa, MasterCard, and even leading social media platforms like Facebook have decided to join the P2P payment motion. The majority of P2P apps work by creating an account on a platform that allows you to seamlessly transfer funds from one wallet to another. Continuous progress in digital P2P solutions is creating a lot of opportunities and advantages for users worldwide.