Peer to peer payments, or P2P payments, are transactions that can be used for anything from splitting a $30 dinner bill between friends to paying your rent. These payments allow the transfer of funds between two parties using their individual banking accounts or credit cards through an online or mobile app. They are becoming popular among people of all ages with no signs of slowing. It is expected that mobile P2P transactions could reach $86 billion in the United States in 2018.

While PayPal—an early innovator in the space—is still the most widely used peer to peer payment service, more and more unique platforms continue to emerge. Here are the facts you should know about P2P payments before deciding whether they’re right for you.

How Peer to Peer Payments Work

Peer to peer payment accounts are typically relatively simple to set up. For whichever platform you choose, you’ll sign up for an account then link your bank account or credit or debit card to it. Some apps might require further verification information and passwords to increase security. After your account is set up you can find other users by their username, their email, or your phone contacts.

Sending and receiving money is usually just a couple of clicks away after that. You choose who you are sending money to, the amount of the transaction, add a reason for payment if you desire, then submit the payment. Depending on which P2P payment service you use, the time it takes for money to transfer can range anywhere from a few seconds to three business days. Many applications keep the money stored in the app until you manually release the money into your personal banking account.

P2P Payment Benefits

P2P payments are all about ease-of-use, convenience, and speed. Though some might not like that they can’t use the “I forgot my wallet” excuse anymore, the immediacy with which you can pay back friends and family is a huge benefit.

For the most part, peer to peer payments work just like taking money out of ATM minus the hassle of finding one to reimburse the recipient. Some P2P payment services charge a flat-fee or low percentage fee. Some P2P do allow for fee-free payment, however. Research the providers to see what if any fees are associated with making transactions.

Being used by over 62% of American millennials, P2P payments are becoming so commonplace, you may hear people say “I’ll Venmo you,” or “I’ll PayPal you,” instead of simply saying “I’ll pay you back.”

The Potential Security Risks of P2P Payments

While for the most part, P2P services are secure, there are always risks involved when sending money online. Whether you accidentally send money to the wrong user or you risk becoming the victim of a data breach, issues can arise. The bigger issue that comes with a fraudulent or mistaken transaction is that getting refunded can be more difficult, especially if you are using the funds from the app and not from your bank. Many P2P payment providers use precautions to lower these security risks, from passwords and PINS to transaction notifications that confirm whether users did indeed send money.

To lower the risk of being victimized by fraudsters, only conduct transactions with people you know. Read up on the type of fraud monitoring your P2P payment system uses and research the quality of the company’s customer support network.

The risks that come with using a peer to peer payment app are things to be mindful of, but shouldn’t necessarily stop you from using this fast-growing and easy way to pay.

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