In this overly technological age, making payments is as easy as ever. Thanks to improved communication networks and a constant influx of new devices, electronic money transfer is now the heart of doing business. The latest entry to this trend is mobile Peer-to-Peer services, which allow customers to pay for items and services through their favorite gadget – their smartphone.
With P2P solutions coming from all directions, merchants and their customers have a good reason to smile. But, how do you know which solution is best for your business? Below are a few tips that could help.
1. Consider the nature of your business
The market has lots of peer-to-peer payment utilities, but what you may not know is that many are intended for specific uses, which range from personal to commercial purposes. It’s, therefore, a good idea to choose a P2P solution with your type of operation in mind. If you own a cleaning business with a recurring clientele, for example, you may want a service that supports recurring credit card billing or an ach merchant account, rather than a point-of-sale setup.
Many service providers include clauses in the contract that prohibit the use of a P2P service for a purpose other than that for which it is intended. Venmo, for instance, notes that using a personal account for business would constitute a breach of contract, which would result in holds or transaction reversals.
2. Mobile P2P billing usually has lower transaction fees, but not always
Compared to typical credit card processing, accepting payments made via mobile P2P apps typically comes at a lower price for the merchant. However, because these apps also allow customers to pay with their credit cards, the fee structure can be unpredictable.
For instance, if a customer uses Venmo to transfer funds from their credit card to your P2P account, the transaction cost will be 3% of the funds paid. On the other hand, if the payment is financed by the client’s bank account, debit card, or Venmo balance, that fee is waived.
Additionally, P2P service providers often note that merchants may be subject to third-party fees, such as those which your payment processor may charge in the event of a chargeback.
3. You won’t have immediate access to your money
A customer touching the “Pay” or “Transfer” button doesn’t necessarily mean the paid amount will appear in your bank account. Many P2P services come with a credit account, into which the funds first go before they are processed and sent to the bank.
Similar to depositing a check or accepting credit card payments, it can take days for a P2P service to process a sale involving your bank. Therefore, although a customer can quickly send funds from their P2P credit account to yours, the transaction will still need to traverse the banking system before it can become actual cash for you to access, outside the P2P service.
When choosing a peer-to-peer solution, therefore, read the terms carefully to know when you may expect funds to appear in your bank account, and how quickly you can use the money.
A mobile P2P service can be a great way to offer your customers a stress-free payment process while saving you some transaction costs along the way. Just be sure to sign up for the right account from a reliable provider.
Blair has been around the world and back. Born in Oregon, he’s passionate about the outdoors & the company he founded First American Merchant, America’s Top Rated Merchant Cash Advance company, serving both traditional and high-risk merchants.