Peer-to-peer (P2P) payment systems are forever changing the way we handle our money and our social finances. Eating out and splitting the tab is now super-easy. Paying back borrowed money can be done anywhere and at any time. 

But are P2P payments really living up to the hype? Read on for all your questions on P2P payment systems answered. 

How do P2P payments work? 

Say you’re eating out with friends and your pal, Meghan, offers to cover the tab and have everyone pay her back. She hands her card to the server while you and your friends pull out your phones. You’ll open the cash-transfer app of your choice, find Meghan in your contact list, and key in the amount to send. You may be required to input your PIN or prove your identity in another way before the transaction is finalized. Within seconds, Meghan will get a notification that the money has been sent. Once the funds actually transfer, Meghan can leave them in the P2P account or move the money to an account at the financial institution of her choice. 

Will it cost me to transfer money? 

Most P2P systems allow you to make a payment from a linked financial account or directly into the P2P account at no cost. However, several providers will take 2-3 percent of any payment made with a debit or credit card. Also, if you want your transfer to happen immediately, you’ll usually have to pay a fee. 

How long will it take for the money transfer to clear? 

The money transfer usually takes one to three business days to clear. 

Are P2P payments safe? 

All P2P systems encrypt your financial information and use security measures to protect your funds. However, these measures aren’t foolproof. Many P2P systems have been targeted by scammers. 

Protect yourself from P2P scams with these steps: 

1. Use two-factor identification.
2. Ask to be notified about every transaction.
3. Never use a P2P service for business purposes or for a transfer with someone you don’t know.
4. Triple-check your recipient’s information before sending.
   
   

If something goes wrong with a P2P payment, who is responsible to cover the loss?

Most services offer their assistance to law enforcement agencies and notify users if they’ve been scammed, but that’s usually the extent of their fraud protection. 

If you choose to use your P2P payment service for a business-related transfer, your fraud protection will be further limited. Most P2P services clearly state in their policies that their platforms should not be used in business transactions. If you disregard these rules, the service will likely offer no fraud protection or assistance in reclaiming lost funds. 

Many users mistakenly think their financial institution will back them up if a P2P payment goes sideways. However, financial institutions like Health Care Family Credit Union are never liable for a P2P payment transfer. For this reason, always follow the suggestions outlined above to give yourself the best means of protection.